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Welcome to Profit Confidential • Tuesday, May 22, 2012

Chinese Stocks Have Higher Risk, But Higher Profit Potential

Monday, January 23rd, 2006
By Mitchell Clark, B.Comm. for Profit Confidential

I’m undertaking a big new project here at PROFIT CONFIDENTIAL. I’ve committed myself to seeking out great investment opportunities in China. Now, I don’t know a great deal about this country, but I do know that its financial growth has created a paradigm shift in global economics.

China is the reason why it costs more to fill up your car with gasoline. China is the reason why the price of zinc and copper are going up… And, China could be the answer to turbo-charging your investment portfolio for the remainder of this decade.

I’ve been researching Chinese companies for quite some time. There is a very strong appetite from Wall Street to participate in these stocks. If you haven’t noticed, all kinds of Chinese companies are listing on American stock exchanges these days.

In the form of American depository receipts (ADRs), you can participate directly in China’s burgeoning growth with those stocks adhering to the well-defined market regulations of American capital markets.

If you work with a broker, ask him or her to tell you about any new China-related IPOs that are coming up. I’m telling you straight up that Chinese IPOs represent one of the very few areas of the stock market that Wall Street is salivating over.

Naturally, if you want to invest in a fast-growing economy like China, investment risk is going to be very high. Never forget that it is easier for a stock to go down in value than it is for it to go up. If you can handle the risk and take the necessary precautions in your portfolio, I think a handful of China-related plays is very much worthwhile for investors right now.

Case in point: Focus Media Holding Ltd. (NASDAQ/FMCN). This Chinese company is white hot on the stock market right now. It recently completed an IPO on the NASDAQ, and it has easily doubled its original listing price. The company runs the largest advertising network in China, using flat-panel screens everywhere from supermarkets to elevators to advertise for big corporate customers. Some of the company’s customers include Motorola, P&G, China Telecom, and Toyota. The company is making acquisitions and expects substantial growth over the next several years.

Investment risk is very high with China-related stocks, but then again, so are the potential returns.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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