By the time Wall Street catches on, you could already be sitting on a fortune…
By Jim Nelson Penny Sleuth and Penny Stock Fortunes
“If you believe you or anyone else has a system that can predict the future of the stock market, the joke is on you.”— Ralph Wanger, Founder, Acorn Funds
Everyone from pundits on TV to the guy next to you at the bar has made claims that their stock strategies will never lose. Even if that guy is Warren Buffett, he’s wrong. There is no strategy that picks stocks correctly 100% of the time. That is the motto of Ralph Wanger.
USA Today once asked a group of portfolio managers whom they would let invest their money. The only person mentioned more than Warren Buffett was Ralph Wanger. In fact, Wanger is one of the only down-to-earth portfolio managers that I’ve ever come across.
Wanger’s been in the business a long time. He joined Harris Associates in 1960 as an analyst. He became a portfolio manager of the Acorn Fund at its inception in 1970. He left Harris in 1992 to form Wanger Asset Management and took Acorn Fund with him. Over the past 30-some years, Acorn was the top-performing growth fund in the business. Wanger has since retired, but he still keeps a close eye on Acorn, which is now the Columbia Acorn Fund.
I’m telling you this today because of something he once said. He wrote a book called A Zebra in Lion Country. In the book, Wanger refers to himself as an “outside zebra” and portfolio managers as “inside zebras.”
What he means by this is portfolio managers, and most investors, for that matter, need to stay inside the herd, where, although they may not get the good grass, they are safe from lions — or, in this case, looking stupid.
“Outside zebras” buy companies that carry more risk, but they are the ones that get the joy of the big gains. Here at the Penny Sleuth, we consider ourselves “outside zebras.”
Opportunity #1: The Only Company That Can Handle All of Canada’s Problems
The American Society of Civil Engineers now warns that the United States has fallen so far behind in maintaining its public infrastructure — roads, bridges, schools, dams — that it would take more than $1.5 trillion over five years just to bring it back up to standard.
As you can probably guess, Canada’s infrastructure problem is not nearly as bad or as costly as the U.S.’s. But with far fewer people and companies, the investment opportunities are just as big. According to Canada’s 2007 national budget, the government will throw approximately $1,000 per person at the infrastructure problems over the next seven years. That’s $33 billion total.
This is only a start…according to the federal infrastructure department in Canada, Infrastructure Canada (IC), the current gap in infrastructure funding is between $44-125 billion. That’s almost what the entire infrastructure of Canada right now is worth (according to IC).
Imagine this for a second: Canada needs to match almost everything it has spent in the past on infrastructure. And the Canadians want to do all this while adding new trade systems to gain more access to Asian markets.
The budget points out problems such as poor road and highway conditions, weak bridges, inadequate water and wastewater systems and a deepening concern over Canada’s ability to compete for trade with the growing Asian economies. So to fix these issues, Canada is planning to use the allotted $33 billion-plus to hire private companies to build the new (and rebuild the old) infrastructures throughout Canada.
Only a few companies exist that are big enough to handle many of these projects. And there is one that I feel will benefit the most…Aecon Group Inc. (ARE:TSX).
Aecon has been a leader in Canada, especially in the Toronto area, in various businesses, including infrastructure, concessions, buildings and industry.
The infrastructure segment of Aecon’s business includes everything mentioned above, like road, highway and airport runway construction and paving; building dams, tunnels and transit systems; as well as utility construction like water and sewer systems, telecommunication networks and even mainline gas projects.
Aecon’s concessions segment takes care of maintenance, management and upgrades that go along with the ongoing operations of certain infrastructure projects.
The company’s buildings segment includes projects like commercial office buildings, schools, hospitals and government buildings. And finally, its industrial segment handles everything from industrial pipe manufacturing and platform/assembly construction to electricity-generation facilities that range from nuclear and fossil to hydroelectric.
The company has proven itself throughout Canada by efficiently completing projects like the Bruce Used Fuel Dry Storage Facility for spent radioactive materials (from the many nuclear plants in Canada). But the company is also diving into international projects like the construction and maintenance, over a 30-year period, of a new airport in Quito, Ecuador, and a cross-country highway in Israel. This kind of experience and trust from the Canadian government, not to mention the international community, puts Aecon in a great position in the upcoming infrastructure boom.
Opportunity #2: This $160 Million Chinese Education Provider Is Set to Explode
Most people typically associate things like pharmaceutical, home building and even technology companies as investment opportunities. But if someone were to tell you there’s a real opportunity to make big money on Chinese education, you’d probably say they’re crazy. Well, call me crazy…
China has made its rapidly educated population a point of pride. From the land of a long agricultural past, more and more Chinese are moving to the cities to work in white-collar jobs. Well, those jobs aren’t just handed to ex-farmers. They must pass through a bit of education first. And they are…
For instance, the number enrolled in a regular institution of higher education has risen from only 850,000 in 1978 to 13,335,000 in 2004.
With more and more people moving to the cities in China, we expect to see that number skyrocket. The schools are trying to keep up with all the new students, but failing miserably. So one little small-cap company, ChinaEdu Corp.. (NASDAQ: CEDU) is starting to make huge strides.
This little educational services provider offers full online degree programs for various majors. It also offers many services for both schools (from preprimary to colleges) and students. The company has exclusive long-term contracts with many schools. This secures its revenue stream for years to come.
All of this secures its revenue stream for years to come. By getting in now, you can ride the wave of liquidity that this will bring.
Opportunity #3: Strike it Rich With the Shiny Yellow Stuff
Precious metals– especially gold– have long been considered sound “safe haven” investments. This all changed as precious metals and other commodities soared to all-time highs in 2007 and 2008. And even though most commodities have pulled back from their highs, gold is still going strong.
We could easily recommend you just buy some bullion or an ETF, but that just won’t do. Here atPenny Sleuth, we have a duty to recommend companies that have the potential to show you monster gains. So today, we bring to you U.S. Gold (AMEX: UXG).
U.S. Gold is a tiny gold exploration company located in Colorado. It is a bit of a risk-taking company. You see, it has almost no reserves as of yet. Instead of going after overpriced mines, U.S. Gold found a nice patch of land with the potential to be worth billions. Let me explain…
A few years back, people thought Nevada was just small-time when it comes to gold. There were a few mines and companies digging around, but nothing huge. Then all of a sudden, at a mine that was first dug in 1965, a group of miners found an amazing pile of gold. Upward of 180 million ounces, to be exact.
We now call it the Carlin Trend. Newmont Mining and Barrick Gold have made their fortunes from this site. Barrick’s stock, for instance, went up 3,700% in the first decade of its Goldstrike mine in the Carlin Trend.
But with over two decades of exploration, the Carlin Trend is a hard one to invest in. Luckily, there’s another “Carlin.” It’s located just 50 miles away. It’s called the Cortez Trend.
The Cortez Trend has the potential to be even bigger than Carlin. Newmont, Barrick and Goldcorp have already placed their stakes in this area.
Rob McEwen headed Goldcorp for about 11 years, and with his leadership and experience in the gold industry, the share price rose over 1,450%. Over the last year and a half, he left Goldcorp to run U.S. Gold. He made it his personal goal to bring the same kinds of profits to U.S. Gold shareholders. So to make that happen, he put his money into Cortez, literally. He owns 21% of U.S. Gold himself, and used this injected capital to buy up all of the junior mining companies that had claims between the big miners in Cortez.
It’s a bit of a risk, as all exploration companies are, but with McEwen at the helm and a sizable chunk of land between all the big boys in Cortez, one little find could spell triple- or even quadruple-sized gains for you.
No comments:
Post a Comment