China overtook Japan as the world’s second largest economy in the second quarter and, in about 15 years China is expected by pundits to become the world’s largest economy. In the second quarter, China reported GDP of $1.34 trillion versus $1.29 trillion for Japan, but far lower than the $15.0 trillion GDP in the United States. China is experiencing continued growth in its per-capita income and spending. Consumer spending only accounts for less than 20% of China’s GDP, compared to around 70% in the U.S. The Chinese need to spend and this is what domestic and foreign companies are hoping for to help drive some growth.

Clearly, in the emerging markets of Asia, it has become a tale of two cities. While China continues to report double-digit GDP growth despite increased concerns of some slowing, Japan reported a weak 0.1% rise in its second -quarter GDP and continues to be impacted by decades of stagnant growth.

In reality, while Japan has faltered over the past two decades, China has used the opportunity to put itsmassive cheap labor workforce to use and create colossal manufacturing capacity for the world’s manufacturers looking for cheap labor and lower costs to produce goods.

As we said, China’s GDP is predicted to slow to the high single digits. The country’s GDP is pegged at 9.2% in the third quarter on dwindling stimulus, according to The State Information Center. China could see two straight quarters of declining GDP, albeit the growth is still far ahead of the U.S. and Europe. In the first quarter, China reported impressive GDP growth of 11.9%, and 10.3% in the second quarter. Pundits estimate GDP growth of eight percent at the end of 2010.

Evidence of slowing in China was demonstrated by the slowest increase in industrial output in July of 13.4% year-over-year and a slower rate of Foreign Direct Investment (FDI) in July. The FDI still grew at a 26.2% year-over-year at $6.92 billion in July, but well off from $12.5 billion in June.

China is also working on reining in speculative loans that have driven up property prices to bubble-like conditions. The fear is that a real estate collapse could wreak havoc on the Chinese banks. While property prices jumped 10.3% in July, its 14th straight month of gains, the increase was slower.

For some, the reality of playing the Chinese capital markets involves excessive political and economic risk. However, as we have said, you need to be well-diversified, which would enable you to play some Chinese growth stocks, especially those of the small-cap variety.

Our Chinese stock recommendations, while losing some ground, continue to show some strong gains. We remain long-term bullish on China, but you should watch for the short-term volatility.

On the chart, the Shanghai Composite Index (SCI) rallied after declining to below 2,350 in early July. The chart looks more positive now than the same time last month. Since then, the SCI has broken above its 20-day moving average (MA) of 2,636 and 50-day MA of 2,550 on a rising MACD. The 20-day MA has also broken above the 50-day MA, which is bullish, but remains well below the 200-day MA of 2,912. The SCI is in a sideways channel between 2,575 and 2,700. A strong break above could drive the index towards the 200-day MA.

It continues to be risky investing in Chinese stocks, but we know that, in the longer term, patience will pay off for us. We continue to favor China for growth investors who have long-term views.

If you’re looking for some downside protection in this market, one of the most popular instruments is an exchange-traded fund (ETF) called the ProShares Short S&P 500 (NYSEArca/SH). Basically, this security tries to mimic the S&P 500 Index 100% in the opposite direction. So, if the stock market goes down, SH goes up by about the same amount. It’s the kind of security that represents some downside protection in equities.

The broader market isn’t looking too good here and you know you’re in a bear market when investors ignore good corporate news. If a stock like Intel Corporation (NASDAQ/INTC) isn’t going up coming out of a recession, then you know you’re in trouble.

We’ll have to see if the current pullback lasts, but it’s likely that the market will test 10,000 on the DJIA and 1,000 on the S&P 500. Investor sentiment seems to be critically volatile.

There isn’t a lot of action to take in a market like this. Speculating in equities is much more difficult in this kind of environment where there really is no trend. Things are up one day and down the next. Perhaps the best strategy for traders is to just play the index futures.

I still view precious metals, particularly gold and silver, as being one of the most attractive sectors in the market for investors to consider. A lot of gold stocks have already gone up in value, but the fundamentals support the current valuations. A lot of mining companies have solid expectations for production growth over the next few years. With the current global fundamentals, I just don’t see gold dropping below $1,000 an ounce. At this price point, mining the commodity is solidly profitable.

We had some strong price performances in select large-caps, like DuPont (NYSE/DD) and Caterpillar (NYSE/CAT), over the last couple of months. Companies like these are viewed as barometers on the global economy. But, the market seems destined for some near-term retrenchment. It’s partly the time of year, but also a reflection of the expectations for the future. We just aren’t seeing the kind of growth necessary for investors to want to buy stocks.

I think some downside protection in this market is a good business strategy. The broader market is highly vulnerable for the rest of this year.

It looks like that downside protection for stocks is going to come in handy. The economic data are catching up with investors and stock prices are behaving accordingly. Given the fundamentals and the outlook, it’s time to start paying serious attention to large-cap stocks. The timing isn’t right yet; but, if we get another major stock market correction, then a good buying opportunity will present itself.

The good news in this market concerns the rest of the world. Germany’s economy is improving and China’s economy is still strong no matter what the headlines say. Australia’s economy is solid. The global economy is experiencing decent growth and this will help pull us out of the doldrums when the timing is right.

Of course, the economy still has to find a new equilibrium for itself. You can’t have that much speculative excess in the system (culminated in the housing crisis) without taking years for it to correct itself. And, speaking of excess, we keep coming back to the same issue about the current state of things — debt. It’s an ugly beast that, frankly, is keeping everyone down.

We’ve been seeing a new trend in economic data over the last couple of quarters, which is that people are choosing not to spend. If there is extra money around, it isn’t going towards excessive consumption. In the near term, yes, this does have a detrimental effect on the economy. Long-term, however, this is precisely what we need to have happen. At the government level, fiscal discipline is out of control. Individually, the age of austerity is becoming apparent. It’s my hope that this trend continues and consumers choose to invest in debt reduction and their savings accounts before considering a batch of new clothes. It’s a simple formula that, in the long run, this economy needs.

Getting back to stocks, what we’ve seen in the first half of this year is a tremendous performance from big companies that have managed to squeeze almost every dollar out of their cost structures. This, on balance, has allowed for an impressive earnings performance so far. If the broader market has further downside (which my gut says it does), then the next bottom is worth paying close attention to. The economic cycle is going to reverse. It’s only a matter of time.

Finally there’s some good news on the corporate revenue front. A lot of big companies reported solid earnings growth in the second quarter, but revenues haven’t been inspirational. The Dow Chemical Company (NYSE/DOW) just reported very solid numbers and this is a good sign for the industrial economy.

The company reported that its revenues in the second quarter this year grew to $13.6 billion, representing a solid 26% increase over the same quarter last year. Dow Chemical experienced a seven-percent increase in sales volume and a 19% increase in prices. This combination of sales and price growth is a good indicator for the industrial economy.

Dow Chemical experienced double-digit sales gains in all geographic areas (31% in North America), and the company expects a sustained global economic recovery led by Asia.

The company’s numbers actually fell short of consensus estimates just slightly. But, in this market, who cares? A 26% gain in sales for the largest chemical company in the U.S. is big news as far as I’m concerned.

We are experiencing an uneven economic recovery and not all industries are participating. It won’t be until the housing sector really stabilizes and all the foreclosures are worked through the system that the economy will be on solid footing for growth. The good news is that monetary policy is still onside and that interest rates remain low.

It would seem that investor sentiment has had a change for the better recently. While investors have been more willing to forgive less-than-stellar economic news, we can’t fool ourselves about the trading action. The broader market rallied in June, and then pulled back sharply. Also keep in mind that trading volume isn’t very robust. I don’t know where sentiment is going to take the current equity market but I’ve learned never to cry wolf. 

A company like Dow Chemical is a benchmark stock to follow. E.I. du Pont de Nemours and Company (NYSE/DD), better known as DuPont, also reported very good second-quarter numbers and cited volume growth along with increasing prices as reasons for its improvement. Most economists, however, expect the U.S. economy to slow in the second half and, while economists are usually proven wrong, the consensus seems probable.

If there wasn’t growth in Asia, then I think U.S. corporations wouldn’t be reporting the kind of numbers we’ve seen this second quarter. We’re definitely on the right track, but we’ve got a long way to go before we can say things are back to normal.

Markets have rallied above key moving averages, driving up the price of stocks across the board. Yet, instead of chasing the price advance, you could wait for a price dip to enter.

Alternatively, you do not have to wait for a stock to retrench to buy. Instead you could write put options on a stock for which you feel the upside is limited and that you want to buy on a decline.

When you write or short a put, you assume the legal obligation to buy a specific number of the underlying stock at the strike or exercise price for a specified length of time until the expiry date of the contract. To compensate you for the risk of exercising, you receive a premium from the buyer of the put option. After the expiry date, should the particular option expire worthless, you as the writer of the put retain the premium. This is a straightforward option strategy.

You may want to write a put under two scenarios:

You are bullish on a stock and believe it will trade above or near the strike price during the life of the put option. You could generate some premium income through writing put options and hoping they’re not exercised.

You want to purchase a particular stock at a price that is below the prevailing market price of the stock. If exercised, the put writer buys the stock at the strike price and, if not exercised, the put writer retains the premium. I will assume you are in this camp.

Let’s say you like Cisco Systems, Inc. (NASDAQ/CSCO), but want to buy at a cheaper price than the prevailing $23.30 as of July 27. Let’s say $20.00. You could short the Cisco September $20.00 Put option set to expire on September 17. If Cisco falls to $20.00 or below, the put would be exercised and you would be required to buy Cisco at the strike of $20.00, which was your objective. However, remember that you also get to keep the $0.22-per-share premium for writing the put, which equates to $22.00 per contract.

If Cisco falls to $19.95, it is likely that the put would be exercised. You buy at $20.00, but given the $0.22-per-share premium, you receive, your adjusted average cost would be $19.78 per share. At the end, you would get a position in Cisco at a price that you want. The risk here is that, should the price of Cisco fall even further, say to $18.00, you would be down $1.78 a share. The key is for the stock to hold and then rebound; otherwise, you would find yourself in a negative position.

Under this scenario, you want to buy a particular stock at a price that is below the prevailing market price of the stock. This strategy is often referred to as a cash-secured put.

On a recent trip to Manhattan, on Fifth Avenue near Central Park, I saw a retail window with the following written in huge yellow letters, “Smart Has the Brains, But Stupid Has the Guts.” My daughter took a picture of this store front window and I’ve kept it in my cell phone picture memory since.

Why am I telling you this?

Over the past 10-year bull market in gold bullion prices, each time the market corrects, the naysayers come out and say, “The bull market in gold is over.” And each time they are wrong.

Have you noticed all the articles in the business pages of the newspapers and the Internet the past month on how deflation could become a big problem? Well, the gold naysayers love this type of media. The economy is improving as well and the U.S. dollar looks like a haven every time another world currency comes under pressure.

So, who would be stupid enough to jump more deeply into gold given the above points? Me.

As I’ve watched and participated in the gold bullion rally since late 2002, each time I see gold prices move lower, I see a buying opportunity. We all know that the summer months (based on seasonality price charts) are the worst time for gold bullion prices.

Gold bullion prices peaked at about $1,260 an ounce in late June of this year. Since then, the metal has fallen back about $100.00 an ounce to the $1,160-an-ounce level. Looking at a price chart, the metal could fall even further to $1,100 an ounce, but why take the chance and wait for even lower prices that may never even materialize? I’m not.

Gold has risen steadily in price from $300.00 an ounce in late 2002 to $1,260 last month, a gain of 320% in eight years. Just as higher than the previous December 31 for nine straight years now. This gold bull market is very strong.

The rise in gold prices could foreshadow a time down the road (could be a year, could be five years) when inflationary pressure will rise substantially and/or the debt of the U.S. will become a huge obstacle for the value of the U.S. dollar, undermining its status as a
world reserve currency.

This past Friday, the White House raised it forecast for the fiscal 2011 budget deficit to $1.4 trillion. Over the next 10 years, Washington is projecting additional debt of $8.5 trillion. We already have $12.0 trillion in debt, so we are headed for $20.0 trillion in
national debt. How can any currency, backed by such debt, sustain itself?

That’s why the “guts” buy more gold.

Michael’s Personal Notes:

The Obama Administration is finally doing something for small business, but I believe the program is ill conceived…that the money will not flow through to the small businesses that are the backbone of this economy.

Under a bill that is awaiting Senate approval, the government will move $30.0 billion to small community banks. The hope is that the banks will leverage that money and offer $300 billion in loans to small businesses, which the government hopes will lead to new jobs. While the intent is good, I do not see this program working.

Talk to any small business banker today and they will tell you the same story: “There is a lack of demand from creditworthy customers” and “The biggest demand for small business loans is from the least creditworthy customers.”

Putting money in small banks to make loans is a great idea — but the government cannot force banks to make loans it believes are risky. In the first half of 2010, Bank of America, the biggest bank in the U.S., wrote off a staggering 14% of small business loans…10 times the rate of other commercial loans.

After the recession, banks are looking for more equity and profitability from small businesses before lending them money, and that is the real reason small businesses cannot get loans. Small business loans that would have qualified for some form of government guarantees (reducing the risk at the banks so they make more loans) would have been a more viable plan.

Where the Market Stands:

As I predicted in a mid-July editorial, “Stock Markets Getting Reading to Turn Positive for 2010,” the market abided and turned positive earlier this week. For 2010, the Dow Jones Industrial Average is up 1.1%.

It has been difficult for a market student and commentator like me to remain positive on the bear market rally in the face of the large head-and-shoulders pattern the Dow Jones formed in the first half of this year and in light of continued poor economic news. Each time the market moves lower, more stock market advisors come out and call the rally over.

But I’m sticking with my gut feeling that the bear market rally that started in March 2009 is not over…that the bear will continue its rally in an effort to suck more investors into the market before taking that big second leg down.

According to a recent survey from the American Association of Individual Investors, the number of individual investors who are bearish on the stock market has hit the highest level since July 2009…and we all know what has happened to stock prices since then.

The stock market does not decline when investors expect it to…and that’s why I believe the bear market rally will continue in the immediate term.

What He Said:

“Over the past few weeks, I’ve written about subprime lenders and how their demise will hurt the U.S. housing market, the economy and the stock market. There’s no escaping the carnage headed our way, because the housing market and subprime business are falling apart. The worst of our problems, because of the easy money made available to borrowers, which fueled the housing boom that peaked in 2005, have yet to arrive.” Michael Lombardi in PROFIT CONFIDENTIAL, March 22, 2007. At the same time Michael wrote this, former Fed Chief Alan Greenspan was quoted as saying: “…the worst is over for the U.S. housing market and there will be no economic spillover effects from the poor housing market.”

07/19/10 — The general uneasiness of the stock market is blatantly apparent and even good earnings news can’t seem to sustain any lasting interest from buyers. Clearly, the bear market reigns.

So far, corporate earnings are holding up well, but the numbers are padded by extreme cost control. Top-line growth just isn’t happening, and this is worrisome for the next 12 months. Unless we get more robust revenue growth, the earnings picture will slowly deteriorate.

There continues to be a lot of talk about two very real scenarios for the economy — a double-dip recession or a lost decade. I’m in the camp that feels that a decade of very slow growth is more probable given the situation. We have a lot of issues to work through before we can even find a new equilibrium to start from.

For individuals, the two main issues to be dealt with are housing and employment. For governments, the two main issues are spending and debt. Really, these issues are the same for both governments and individuals. They’re just on different scales.

As we all know, the housing market doesn’t operate like the stock market. Housing booms and busts take a lot of time to work things out. And, so do debts and deficits. If governments decide that they want to be more prudent with their finances (as they should), then this will have an impact on the economy. We can’t have it both ways. In my view, the housing market has only just begun to right itself after the initial shock of the subprime mortgage meltdown. We’ve got a long way to go before inventories, foreclosures and prices find the right balance, before another upturn in the housing market develops.

Low and slow. That’s a reasonable expectation given the current state of things.

There are also a lot of potential shocks out there that could contribute to a slow growth decade. The sovereign debt issue in Europe is not over. The numbers really aren’t getting any better. The politicians have only begun thinking about the issue. It’s a great first step, but investor sentiment can still easily turn on the euro. This currency risk has enormous ramifications for you and your daily life. In addition, the world’s second largest economy (China) is in the process of deleveraging itself both in terms of monetary and fiscal policy. You can see this reflected in Chinese equity markets. In a bid to keep a lid on inflation, China’s economic growth is likely to come under pressure over the next several years. Whether we like it or not, this affects our economy.

It really doesn’t matter what the prediction is. An individual’s best strategy in these economic times is the elimination of debt if possible. After that, you can trade the market’s action, but don’t expect any major new trends to develop.

By Mitchell Clark, B.Comm. — Ahead of the Street column

One of the best signs for the economy is the strength being shown in the semiconductor chip industry, and Intel Corporation (NASDAQ/INTC) is leading the way. The company’s latest numbers were very good and the stock has been doing very well, particularly over the last couple of months. Intel is one of my benchmark stocks that I follow on a weekly basis. This company is important to follow, because its business provides a clear measurement of what consumers are spending their money on. Intel now supplies most of Apple’s (NASDAQ/AAPL) computer chips, so the company is literally at the heart of virtually the entire technology business.

Not surprisingly, this stock did incredibly well during the technology bubble in the 1990s. Ever since then, though, the stock’s slowly trended downward and lost about half of its value during the recent financial crisis. Only now is Intel experiencing renewed enthusiasm from investors. In my mind, the stock would have to pass the $30.00-per-share level in order for it to be considered as having broken out of its decade-long decline. Currently, the shares are trading around the $24.00 level.

What Intel says about its business provides a good read on consumers’ purchasing power in the technology industry. In the first quarter, business was good. But, there are other, smaller semiconductor companies that are also doing well and this means that spending at the wholesale, industrial level in the technology industry is improving.

One such company that illustrates the positive trend is Cavium Networks, Inc. (NASDAQ/CAVM). This company makes semiconductor chips that are used in electronic equipment that facilitates video, voice and data transmission at high speeds. The
company sells directly to the manufacturers of networking, wireless and consumer electronic equipment.

In its latest quarter, Cavium saw its revenues climb over 100% to a record 42 million dollars. The company experienced a sequential revenue increase of 30% and the business is just about to achieve profitability with strong margins and record bookings for the future.

This company is saying that business is strong and getting better. It’s a good sign for the industry and for the economy. In my mind, it also shows that the technology sector will continue to be one of the strongest industries this year. Already, large-cap technology stocks have put in a tremendous performance and I think this trend will continue.

It seems like there’s a new business cycle developing and it’s beginning in technology. The semiconductor business is the perfect place for it to start, because computers chips are in a lot of products, such as cars, phones, computers, consumer electronics, and so on. Pull up a five-year chart on the NASDAQ and you’ll see just how close that index was to making a full recovery before it broke down in 2008. The broader market is certainly due for a correction and, when it happens, a good buying opportunity should present itself in the technology sector. Just owning the index seems like a solid play. One of the best signs for the economy is the strength being shown in the semiconductor chip industry, and Intel Corporation (NASDAQ/INTC) is leading the way. The company’s latest numbers were very good and the stock has been doing very well, particularly over the last couple of months. Intel is one of my benchmark stocks that I follow on a weekly basis. This company is important to follow, because its business provides a clear measurement of what consumers are spending their money on. Intel now supplies most of Apple’s (NASDAQ/AAPL) computer chips, so the company is literally at the heart of virtually the entire technology business.

Not surprisingly, this stock did incredibly well during the technology bubble in the 1990s. Ever since then, though, the stock’s slowly trended downward and lost about half of its value during the recent financial crisis. Only now is Intel experiencing renewed enthusiasm from investors. In my mind, the stock would have to pass the $30.00-per-share level in order for it to be considered as having broken out of its decade-long decline. Currently, the shares are trading around the $24.00 level.

What Intel says about its business provides a good read on consumers’ purchasing power in the technology industry. In the first quarter, business was good. But, there are other, smaller semiconductor companies that are also doing well and this means that spending at the wholesale, industrial level in the technology industry is improving.

One such company that illustrates the positive trend is Cavium Networks, Inc. (NASDAQ/CAVM). This company makes semiconductor chips that are used in electronic equipment that facilitates video, voice and data transmission at high speeds. The
company sells directly to the manufacturers of networking, wireless and consumer electronic equipment.

In its latest quarter, Cavium saw its revenues climb over 100% to a record 42 million dollars. The company experienced a sequential revenue increase of 30% and the business is just about to achieve profitability with strong margins and record bookings for the future.

This company is saying that business is strong and getting better. It’s a good sign for the industry and for the economy. In my mind, it also shows that the technology sector will continue to be one of the strongest industries this year. Already, large-cap technology stocks have put in a tremendous performance and I think this trend will continue.

It seems like there’s a new business cycle developing and it’s beginning in technology. The semiconductor business is the perfect place for it to start, because computers chips are in a lot of products, such as cars, phones, computers, consumer electronics, and so on. Pull up a five-year chart on the NASDAQ and you’ll see just how close that index was to making a full recovery before it broke down in 2008. The broader market is certainly due for a correction and, when it happens, a good buying opportunity should present itself in the technology sector. Just owning the index seems like a solid play.

By Mitchell Clark, B.Comm. — Ahead of the Street column

The great thing about big companies is that they tend to have a lot more staying power than small enterprises. Sure, they might not be as nimble or as quick to adapt to changes in business conditions, but when big corporations are determined to ride out a storm, they often do so with flying colors. We’re seeing this now with the solid first-quarter earnings being generated by a number of Dow stocks. Long-time readers of this column will know of my affinity for following a number of “benchmark” stocks. I keep track of a number of companies on a weekly basis, but each quarter, I like to seriously analyze what my benchmarks are saying about their operations and their business climates. I advise any equity investor to do this — and you certainly don’t need to own the stock or even be interested in taking on a position. The idea is to follow, read and listen to what these companies are doing in the current economy. It’s one of the best ways to hone your market view.

One big company that’s always on the top of my list as a very meaningful benchmark is United Technologies Corporation (NYSE/UTX). Some may not be familiar with this $70.0-billion company, but it’s a huge conglomerate that owns a number of successful, brand-name businesses like Otis (elevators), Carrier (residential heating and cooling), UTC Fire Products (surveillance and alarms), Pratt & Whitney (aircraft engines), Hamilton Sundstrand (aerospace products) and Sikorsky (helicopters), among others.

Really, United Technologies is just one giant technology company with its businesses operating at the heart of consumer, corporate and government customers. With over 200,000 employees, the company was named the “Most Admired” aerospace and defense company by “Fortune” magazine in 2009.

My enthusiasm for following this company is due to the depth to which its component businesses reach into the non-automobile manufacturing economy. What this Dow stock says is important. In the first quarter this year, United Technologies reported revenues
that fell slightly, but earnings beat consensus estimates — mainly because of cost cutting. The company’s Sikorsky helicopter division is doing well on strong military orders, but its elevator and HVAC businesses are struggling to grow. The company’s two aerospace businesses also saw their revenues fall as compared to the first quarter last year.

So, it’s pretty clear that things still aren’t all that rosy in the real industrial economy. However, even with slightly declining sales, the company was able to grow its earnings, and this is why the stock has been so strong this year

United Technologies is the perfect example of why a large-cap stock can do great when its business isn’t growing. Big corporations can’t control their revenue growth, but they can squeeze every expense to pad the bottom line. So, while sales fell slightly, earnings increased, and investors lived happily ever after. It’s the simple truth for many large-cap companies, and it’s why large-caps will be the big story this year.

— “Ahead of The Street” Column, by Mitchell Clark, B. Comm.

On a number of occasions in this column, I’ve written about a very interesting small company called A-Power Energy Generation Systems, Ltd. (NASDAQ/APWR). This stock has been a powerhouse wealth creator this year and it’s been volatile. To say that this stock is a trader’s dream would be an understatement.

It doesn’t happen very often (maybe once a year), but every now and again you come across a company that offers a unique “package” in terms of its investment potential. In A-Power’s case, the company builds small, localized power plants in China. This in itself is an exciting prospect for any company with this kind of expertise.

China doesn’t really have a national power grid. Cities, towns and industries build their own power plants to serve their local market. The International Energy Agency (IEA) projects that China’s energy demand will grow about five percent annually from 2005 to 2015. Based on these growth rates, China will overtake the U.S. as the world’s largest energy consumer shortly after 2010. The IEA estimates that China will have to add more than 1,300 gigawatts (GW) to its electricity-generating capacity over the coming years, more than the total currently installed capacity within the United States. So, in A-Power’s case, you’ve got a company that’s in the right industry at the right time. Those are good fundamentals.

The company also is in the wind power generation business and it’s done so in the right way. A-Power recently signed a deal with GE Drivetrain to supply it with wind turbine gearboxes and to establish a joint venture partnership for a wind turbine gearbox manufacturing plant in China. A-Power also recently announced that it was picked to be one of the lead suppliers of wind turbines for a new wind power project in Texas that is expected to be one of the biggest alternative energy developments in the U.S. Once the financing is in place, the total development is estimated to cost about $1.5 billion and take up 36,000 acres. Again, these are good fundamentals if you’re in the business of selling wind power equipment.

A-Power has already generated outstanding growth in its financial results and the company reports its latest numbers to the Street this week. Naturally, the stock is rallying in advance of the numbers. It’s up about three points just in the last week and has more than tripled in value since the beginning of the year.

Like most fast-growing companies, this stock got hammered during last year’s financial crisis. It has, however, made a full recovery since the November and March lows. Like I say, if you look long enough, you eventually come across a few amazing companies that aredoing the right things at the right time in the right place. In my mind, A-Power is one of those companies, so it’s a good example of what to look for.