By Matt McCallJun 11, 2019
When you hear the word “delay,” what do you think?
If you’re like me, you go right to the bad stuff… a flight delay, an appointment delay, a traffic delay.
But believe it or not, there is one delay out there with the potential to make you a whole lot of money. And it stems from China, where I just so happened to have recently travelled – fortunately without any delays!
I follow China closely, but nothing beats firsthand, boots-on-the-ground research. I saw and learned a lot while I was there, and I will continue to share key insights with you in the future.
Today, I want to talk about the general opportunity within the country. Many believe the gains have already been made in past years – but I could not disagree more.
The potential of a trade war combined with fears of a slowing economy have caused many stocks to crash. Everything from large-cap tech stocks to manufacturing companies have been affected.
Investors are afraid of what’s around the corner. There is something really big around the corner… but it’s not what the masses expect. It is the start of the next leg higher for one of the greatest economic stories of the century.
Among the biggest opportunities right now are the Chinese companies that resemble their American counterparts in earlier stages of growth. I’m talking about the “Google of China,” the “Facebook of China,” the “Amazon of China,” and the “Netflix of China.”
Since the U.S. economy is much more mature than China’s, innovative new business ideas tend to spring up, attract investment capital, and get applied in the U.S. before they do in China. But since the Chinese government uses laws and regulations to restrict (and sometimes ban) non-Chinese companies from doing business in the country, many top American companies are shut out of the giant market. Facebook is a perfect example. It is not allowed in China.
The current population of China is 1.42 billion, which is more than four times bigger than the U.S. at about 330 million. This means that many business sectors in China are even bigger than the massive U.S. market.
And when a Chinese company applies a successful innovative business model like Amazon’s or Google’s, the results can be extraordinary. That massive stock gains come on a “lag” after the gains are generated in America.
And that’s the delay I mentioned above.
I recommend these companies to my Investment Opportunities readers. We own the “Facebook of China,” the “Amazon of China,” the “Netflix of China,” and what we might call the “Lending Club of China.” And we just added the “Google of China” to go along with the pack.
These stocks are all off their recent highs in the widespread selling in China, but their long-term potential is big. That makes them strong buys at the lower prices.
While on my trip, I uncovered a few additional trends that I plan to keep an eye on in the months ahead. One is Chinese biotech, and I told you all about the huge 116X growth potential in that space just a few weeks ago.
Another – believe it or not – is cement. Yes, you read that correctly…
When was the last time you had a conversation about cement? Maybe once in the last 10 years? Well, in just the 10 days I spent in China, I would say cement came up in conversation with analysts at least 15 times. It was discussed so often that it became a running joke among our group.
But the opportunity is no joke. China is in for an infrastructure boom the likes of which nobody has ever seen before. In the 15 years between 2016 and 2030, China plans to spend $14.2 trillion on infrastructure. That is difficult to fathom. And as cities continue to grow, as more and more homes are built, as airports and roads and bridges are updated, the demand for cement will only increase.
China already makes more cement than the rest of the world… combined. And since 2013, China has produced more cement every two years than the U.S. did during the entire 20th century.
You would think that much production would result in an oversupply. But not when there is this kind of demand.
The obvious strategy is to invest in one of the large Chinese cement companies. Unfortunately, that’s a lot easier said than done. These companies only trade in Hong Kong at the moment and are not available for purchase in the United States.
And in the meantime, there are plenty of other opportunities we can take advantage of today.
How many times have you looked back and wished you had bought a beaten-down stock? There are not enough fingers on my hand to count the number of times I have had that feeling.
It’s part of investing, and hindsight is always 20/20. But in the case of Chinese stocks right now, we don’t want to look back in a couple of years with regret.
It takes discipline to buy stocks that are beaten down. It also takes analysis to determine whether the longer-term outlook remains positive. In this case, the answer is a resounding yes.
Warren Buffett famously said, “Be fearful when others are greedy. Be greedy when others are fearful.”
I’d say he’s done pretty well with that as his investing philosophy. And that’s exactly the situation we’re in with China today.
P.S. I know a lot of investors are hesitant to invest in China because of the government. I understand it, but the truth is, the government can be a positive force. When it gets behind an industry or a company, the profits can be staggering.
You really need to see some of the numbers to believe them. I have them for you in the brand new issue of Investment Opportunities, where I also go into detail on the “Google of China.”
This company primarily resembles Google in its web business, but another similarity is autonomous vehicles (AVs). In Beijing and other major Chinese cities, auto companies are testing AVs and logging hundreds of thousands of miles. One company is the runaway leader in miles driven.
But in order for autonomous and electric vehicles to go mainstream, they will need a new battery technology to live up to their full potential. These better batteries are the key to the future, and I am absolutely convinced that their adoption will create huge fortunes at incredible rates of speed.
If you can claim a small stake in the companies developing this technology now, you could benefit from one of the rarest, most powerful economic forces in history. Click here to learn more.
Self-driving cars – aka “autonomous vehicles” (AVs) – represent one of the biggest investment opportunities of the next 25 years. This innovation will transform huge portions of our economy and create trillion dollar ripple effects through time. It will create huge new winners in short periods of time. It will demolish losers in equally short periods of time. It’s critical that you stay on the right side of this trend. Learn more here.
Marijuana has been outlawed most everywhere for decades… but now a wave of legalization is starting to sweep the world. This will create massive new markets and massive stock market winners. Learn more here.
If I had to make one bet for 2019 it would be that betting is going to be big. The Supreme Court’s May 14 ruling cleared the way for states to allow sports gambling. And in my 25 years of investing experience, I honestly cannot remember many things that come close to magnitude of the investing opportunity that opened up to us. Massive amounts of money are involved in sports betting, and I expect massive amounts of money will be made, too. Learn more here.
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