What’s the first thing that pops into your head when you think of China? Yao Ming? Egg rolls? Mao Zedong?
For a lot of Americans, the answer is the Great Wall of China.
I can see why … the Great Wall is a spectacular accomplishment. Built more than 2,000 years ago, it’s still one of the largest construction projects ever completed by mankind. The wall is up to 30 feet thick … as tall as 25 feet … and stretches across northern China for thousands of miles.
But China’s construction and engineering prowess didn’t stop with the Great Wall. Today, I’d like to tell you about four of the country’s modern marvels, and three of its most promising construction investments …
China’s Construction Boom Is
Resulting in Architectural Marvels
China is undergoing an unprecedented building boom — airports, stores, bridges, factories, power plants, dams, highways, apartment buildings, athletic stadiums, skyscrapers … you name it.
But these projects aren’t just boring, utilitarian buildings … they’re some of the most impressive new structures in the world. Here are four projects that will give you a glimpse of what’s happening in China these days:
The Shanghai World Financial Center — Rising in the Lujiazhui financial district in Pudong, the Shanghai World Financial Center is a 101-story skyscraper that will be the world’s tallest building when it is completed in 2008.
In the design process, the architects had to overcome a major challenge — the powerful winds that plague Shanghai. Their solution was a giant cutout at the top of the building. That will not only reduce sway, but also house the world’s highest outdoor observation deck!
Central Chinese Television CCTV headquarters — Whenever I talk to enthusiastic Chinese entrepreneurs, I forget that the country is controlled by the Communist party. But make no mistake about it — China still lacks some of the basic human rights that you and I take for granted, such as freedom of speech.
For example, the state still controls television stations, including Central Chinese Television (CCTV). And the channel’s new headquarters is designed to remind everyone of who’s in charge — the CCTV building defies traditional notions by using two leaning towers bent 90 degrees to form a continuous loop.
Beijing National Stadium — The 2008 Beijing Olympics are China’s opportunity to show the world how progressive, modern, and successful the country has become. And the new Olympic Stadium will be one of the key focal points.
It’s magnificent! The stadium resembles a bird’s nest constructed of delicately placed branches and twigs. Each discrete space within the facility, from restrooms to restaurants, is constructed as an independent unit within the outer lattice. That makes it possible to encase the entire complex with an open grid that allows for natural air circulation.
National Grand Theater — Located near Tiananmen Square, the 490,485-square-foot National Grand Theater appears to float above a man-made lake.
One of the building’s most intriguing innovations is the use of a semi-transparent skin that will give people passing by a glimpse of the performances taking place inside. The feature really highlights the building’s public nature.
Of course, there’s one thing that I love even more than great architecture … building a portfolio of profitable investments …
Chinese Construction Making
Some Companies Crazy Rich!
I’m not showing you these impressive construction projects just to entice you into visiting China. Rather, I’m trying to hammer home the point of how extensive and rapid China’s expansion is … and how much money is being made there.
Look at the statistics: It’s estimated that one-third of the world’s steel, one-half of its concrete, and two-thirds of its construction cranes are being used by China. You can imagine what that’s doing for both natural resources and many of the companies involved in construction supply businesses.
Think it’s too late to get in? It’s not! If anything, I think activity will pick up — not slow down — from the 2008 Olympics all the way to the 2010 World Expo to be held in Shanghai.
There are years left in this mega-cycle, and plenty of time for key construction stocks to double or triple. Right now, I’ve got my eye on these three promising opportunities:
Construction Grand Slam #1: This company pulled in more than $3 billion in revenues from China last year. And the company expects to double that before the Olympics. I bet they’ll do it because they’ve been doing business in China since 1908! They obviously understand the market.
The stock jumped by 71% in 2005 and another 86% in 2006. Yet, it’s only selling for 14 times earnings after you back out the $4 billion of cash the company is sitting on. I think this stock will double in the next two years.
Construction Grand Slam #2: This company is the largest builder of highways, dams, ports, and bridges in China. That’s impressive by itself, but get this — the Chinese government is this company’s largest single shareholder! When it comes time to dole out the multi-billion-dollar construction contracts, who do you think is going to get them?
This company went public just two months ago. It’s selling for a little more than $1 a share, and its best (and most profitable) days are straight ahead of it. Heck, you can own 1,000 shares of this exciting company for a little more than $1,000. Talk about leverage! My 24-month price target? At least $5, or a 400% return.
Construction Grand Slam #3: One consequence of China’s breakneck growth is a horrendous increase in pollution. I’ve seen it firsthand. In fact, I don’t even bother to reserve a high-floor hotel room because I can’t see through the smoky haze anyway. And I strictly obey the “water not potable until boiled†signs that dot almost every hotel room in China.
In fact, most of China’s rivers are so polluted that government officials have found it cheaper to desalinate salt water than clean pitifully polluted fresh water. This is why the world’s premier desalinization company is landing contract after contract, and is on the cusp of seeing its profits (and share price) explode. I think this stock will triple from its current price of less than $2 a share.
Now, I can’t give you the names of these companies because that wouldn’t be fair to my Asia Stock Alert subscribers. However, I can tell you that these companies aren’t based in America. One of the stocks is available on the NYSE, but the other two are listed in Singapore and Hong Kong.
Please don’t let that discourage you though, because investing in foreign stocks is a piece of cake these days. As long as your broker has a foreign trading desk (most do), you can buy foreign shares as easy as you can buy Microsoft or General Electric.
Opening your mind to opportunities outside the U.S. is a great way to find some of the fastest growing companies in the world.
Best wishes,
Tony Sagami
P.S. If you’re interested in learning more about my favorite Asian stocks, subscribe to Asia Stock Alert for just $199 a year.
About MONEY AND MARKETS
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.
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