The Biggest Tech Opportunity in China
Wednesday, April 12, 2006 | Wayne Mulligan
Ok, I'm not going to mince words here … I'm going to get right down to business.
I say that because the time for cute anecdotes and analogies is over. It's time to talk dollars and cents.
A few months ago I wrote to you and told you about a company called China Mobile (NYSE: CHL). I talked to you about how the company was obviously undervalued, and if you didn't get involved immediately you might miss out on an easy way to put some money in your pocket.
And then, if that wasn't warning enough, only a few weeks ago I wrote to you about the "Tidal Wave of Cash" that was heading to the US from China.
I discussed, in no uncertain terms, the macro-economic conditions that are currently taking shape in the fastest growing economy on earth, and conditions in China's Wireless sector that - if analyzed properly - could propel your net worth into a whole new category.
At that time I also reminded you that China Mobile was up only 7% from where I recommended it. My point was that you still had a shot to get involved …
But not so much anymore: The stock has already shot up over 20%!
I'm not saying this to brag or to rub your face in it - I'm saying this because it's the truth. I'm saying this because sometimes everybody needs a wake up call … and this, my friend, is your wake up call.
If you're reading this now and you never bought a single share of China Mobile, I only have two words for you:
DON'T WORRY!
By the time you read this article, I'll have just published a brand new recommendation for my Tech Stock Insider premium members. Consider this recommendation a rare second chance to get in on the gains you missed with China Mobile.
The Next Big Profit Opportunity in Chinese Telecom
The company I JUST recommended in the April issue is in the one sector where you could make easy money with very little risk. Even more than China Mobile, this company stands to benefit in a very big way from the "Wireless Wave" currently brewing in China.
This is a company that has seen its sales grow by 95%, and its profits by 117% in the past year alone! But for some reason its stock is still only trading at 14 times earnings!
Meanwhile, a close competitor who does half the sales, half the earnings, and NOT EVEN HALF the growth as them is trading at a multiple of 30!
A True Win-Win
The beauty of the company I'm talking about isn't just in the fact that it's grossly undervalued ...
It also isn't just because they've recently secured joint ventures with some of the largest technology companies on the planet ...
And it's certainly not just because the company is in the middle of a WHITE HOT growth market …
It also isn't just because they've recently secured joint ventures with some of the largest technology companies on the planet ...
And it's certainly not just because the company is in the middle of a WHITE HOT growth market …
Those are all good reasons, and they definitely make me feel more secure in the investment, but the real "secret sauce" in this investment … the key ingredient that makes this situation a "win-win" is this:
When business is good for the Chinese Wireless sector, this company will do extremely well. But when business is bad, this company will do EVEN BETTER!
That's right, the company profiled in this month's issue is in a perfect position to continue riding the Wireless growth wave in China.
But what makes it truly unique is that - even after the market cools off - this company is in a position to do even better than it's doing now that the wireless craze is in full swing!
I know that sounds crazy. I know you're scratching your head and saying, "Wayne that just isn't possible. Or is it?"
I'm telling you that it is.
Think of it this way: Down the road, when wireless growth in China slows and competition for customers begins to heat up, the competitors in this space will want to gobble up as many customers as they can. To do this they'll need to cut prices.
When they cut prices, they'll need to cut costs.
This is where my April recommendation comes in. Currently the company is a leader in outsourced services for many of these Chinese mobile companies. When these companies want to cut costs, they'll push more and more high-cost processes to outsourced providers.
So when business gets tough for them … it will get even BETTER for the company we're investing in!
Remember what Wayne Gretzky said once when asked why he was such a great hockey player. He responded, "I skate to where the puck is going to be."
My friend, the "puck" in this case is going to be in China, and we're in a perfect position to slap it home with my April recommendation.
Until next time …
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Wayne Mulligan
Chief Investment Officer
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