The folks at Euro Pacific Capital, led by senatorial candidate Peter Schiff, are looking for clients for their international-focused brokerage house, which generally solicits US clients for building accounts focused on dividend-paying foreign stocks and precious metals, in keeping with Schiff’s basic strategies (which as far as I can tell is, in brief: dollar will collapse, fiat currencies doomed, export-led countries and commodity producers will dominate).

And every now and then they release a newsletter or special report that highlights a few of their favorite stocks — but just like our more traditional newsletter dudes, they know the best way to get a response is to withhold the actual details until the potential customer or client calls (or subscribes). In Schiff’s case he doesn’t want to sell you a subscription, he wants you to park your money with one of his brokers and generate some nice commissions as you buy into the stocks that he likes on foreign exchanges.

So if you don’t feel like signing up with Euro Pacific, or even chatting with one of their hungry brokers on the phone, how about we try to figger out just which stocks he’s teasing today? That is, after all, the Gumshoe way.

The basic thesis of his special report on Investing in China’s Infrastructure is that China will rise because of their high personal savings rate, high foreign reserves and low government debt, healthy banks, access to relatively low commodity prices (compared to the height of the commodity bubble), and, more than anything else, a huge government focus on stimulating the economy through building power generation, the electrical grid, roads and railways, and water conservancy and treatment projects.

And then, of course, we get some stock ideas … or at least, the ideas behind some stock ideas, without the actual stocks being named.

“We’ve identified four companies we think are in a position to ben- efit from the road map provided by China’s stated infrastructure goals. Top notch infrastructure companies to begin with, they offer a sound way to take advantage of the increased government subsidies …”

And what are those companies, you ask? Well, let’s start digging into the clues:

“Company #1 provides transportation infrastructure construction services in China. The company also engages in consulting, design, manufacturing, and development. The construction segment engineers and builds transportation projects and also constructs buildings and integral underlying support systems.

“Company #1 has benefited greatly from the increased investment in infrastructure in China, expanding its business and increasing its earnings significantly in the first half of 2008. Its five-pronged strategy is to strengthen its position in infrastructure construction by pursuing ambitious projects and producing high-margin products, expanding further into property development, exploring overseas growth prospects, and further improving its cost structure and operational efficiency.”

Well, they don’t exactly go out of their way to give a lot of specific clues in there, do they? Fortunately, they do also include a stock chart (though it conveniently neglects to have a price scale to it) … so who could this be?

Going off of the generic teaser for this construction firm, I narrowed it down — and then got an exact match on the shape of the chart, so I can tell you that this mus be: China Railway Group (ticker is 390 in Hong Kong, CRWOY or CRWOF on the pink sheets). CRWOY is the ADR, listed at 25:1, which means that each ADR represents 25 shares in Hong Kong — the shares trade right around HK$5.50, so 25 of those would be HK$137.50, which at the current exchange rate is about $17.70. CRWOF is a regular 1:1 pink sheet listing, so the fair price ought be be around 70 cents, but neither of these trades very much outside of Hong Kong.

Schiff teased out the sister company to this one, the other giant Chinese railway and infrastructure firm, last April in a similar newsletter — that one is China Railway Construction, it’s now at a fairly similar price to when I wrote about it in April of 2009, both of these stocks have followed a similar pattern over the last year, shooting up into August as the economy recovered, and moving down pretty steadily for the eight months following. These are massive, state-controlled companies (China Railway Group is 58% controlled by the Chinese govt.) that do a lion’s share of the big construction projects, including the big railroad expansions, and also work overseas (China Railway Group just got a huge Indonesian coal transport contract last month, for example, and they’ve been accused of labor violations regarding their workers on some big projects in Africa).

I’ll try to get to the rest of these stock ideas, so I won’t get too into the details of each one — you can dig in yourself if you like, Bloomberg says the PE ratio is about 40 or so, and this is about a $17 billion company (market cap). They have not ever paid a dividend (which makes them stand out as a bit different from most of the Schiff picks I’ve covered), but income has been growing.

Next?

“Company #2 helps to increase the scale and efficiency of Chinese agriculture by aggregating family farms into collectives – thereby increasing standardization and eliminating multiple layers of middlemen. Generally, the terms of the acquisitions require the company to offer upfront payments and employment contracts to farmers. This company helps improve profitability through investments in agricultural equipment, fertilizers, and pesticides. Farmers benefit through better pay and access to credit.

“We think this company has a promising future because of its unique business model, growth potential, and government support. Further, the financial statements have improved significantly in the last year and valuation is still attractive despite recent strength.”

Again, not a huge number of specific clues in there — but they did show a little chart of this stock’s movement over the past year, so I can confirm that they’re teasing:

Chaoda Modern Agriculture (ticker 0682 in Hong Kong, 1:1 pink sheets symbol CMGHF, 50:1 ADR on the pink sheets at CMGHY, both pink sheets listings trade in light volume).

I wrote about this one roughly a month ago for the Irregulars, following a Bryan Tycango teaser for the same stock — so not to repeat myself, I’ll just share an excerpt from that commentary here, I haven’t looked at the stock since then:

“Chaoda Modern is a producer of non-commodity foods — ie, they don’t grow grain, they grow vegetables, fruit and tea (about three quarters of their land is used for vegetables, so that’s the main focus) on the thousands of acres of farmland they’ve been acquiring for years, and they process that produce for local consumers and for export. And they have been consistently growing their farmland holdings, as of the filing last summer they did have roughly 95,000 acres (they report in hectares and claimed 38,565 hectares, which is about 95,200 acres) — though as of their most recent release for the period ending December 31, 2009, that number has risen again, to over 100,000 acres.

“Likewise, the cash position has increased and now stands at about $440 million (RMB 3 billion) — at the current exchange rate it was about $250 million before this latest filing, so that’s again close enough. If you’d like to check my numbers or delve into their filings more deeply, most of them are conveniently available here in English.

“My impressions? I’m pretty, well, impressed — their margins are a lot higher than I would have guessed for a vegetable farmer, with gross margin of 64% and pretty low expenses, it certainly seems like they’re making things work. They have been getting consistent yields from their vegetable farms, and though the prices are not constant they have generally been able to also consistently increase their revenues and profits thanks to the additional acreage they bring on each year and to incremental efficiencies. The last reporting periods have apparently shown a bit of weakness in produce demand thanks to the financial crisis, but the numbers still look decent.

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“Earnings growth for the last six months of 2009 was about 20% over the comparable period of 2008, and the diluted earnings were RMB .44 per share — overall profit was down substantially from the prior period, but diluted earnings per share was still up (basic earnings were RMB .75 in the second half of 2008, but diluted earnings were RMB .39). If you look at the last two six months periods, calendar year 2009 (they’re on a summer fiscal year), the trailing earnings are RMB 1.10 per share.

“Then we have to do more currency translation, because it trades in HK$ and the Yuan Renmimbi and the Hong Kong dollar have diverged a bit in recent years … so those earnings translate to HK$1.25, which means at the last trade in Hong Kong of HK$8.52, the shares were selling at a PE ratio of just under 7.”

The shares closed at HK$9.17 overnight, just FYI. I don’t think they’ve released any news since then, but haven’t checked closely.

There are two more ideas teased by Schiff, another Chinese construction firm and a Chinese electrical equipment (transformers and turbines) company, but it will take me a bit more to dig into those — I’ll get into them as soon as I’m able (or, of course, if you want to take a shot at them you’re more than welcome to share your sleuthing in the comments below — here are the preliminary clues for you if you want to get started and don’t feel like turning over your contact info to Schiff to get a copy of his “special report” with the full teasers in it:

“Company #3 designs, manufactures and sells electricity transformers to independent power producers in China. In 2006, the company leveraged its technology to produce transformers for the wind power market. In addition to its core business, this company has recently secured its first large wind turbine customer and is in testing with another potential customer that could provide meaningful growth in the next several years.

“This company is run conservatively with minimal debt and positive free cash flow. Although it possesses a growth profile, the company also pays a dividend. despite strong performance in 2009, we feel the company remains attractively valued.”

So that’s #3, feel free to register your thoughts below. Number four:

“As an industry leader in the manufacturing of the customized machinery that facilitates elevated road and railway construction, Company #4 offers a unique approach to investing in China infrastructure.

“It provides bespoke solutions for major construction projects such as bridges and highways, including carriers for moving heavy loads, marine hoists, and other infrastructure construction and inspection equipment. One of its most innovative solutions is a concrete pre-fabrication technique that greatly reduces the amount of time it takes to build elevated road beds and bridges.

“From 2008 to 2009, the company saw a year-over- year revenue growth of more than 23%.”

Haven’t even started to look at those, I’m afraid, but I’m all ears!

And of course, it should be noted that Schiff is far more careful and sober than the typical newsletter hypesters — he does have a greater responsibility to his customers since he acts as a broker, not just a commentator and member of the press (as newsletters are generally considered), so he has careful notes about the risks of all of these stocks, and reiterates several times that they might not be right for you and that you should speak with a broker (at Euro Pacific Capital, naturally) before investing. I have no idea whether or not those brokers will do a good job at matching you with investments — my understanding is that brokers don’t generally (pending reform changes) have the same fiduciary responsibility as investment advisers, though of course they do work with individuals so they have some responsibility for serving individual needs, (unlike newsletter editors, reporters, commentators, and folks like me who just broadcast our opinions widely, with no regard for what’s a good match for your personal situation).

So there you have it — If you folks don’t figure out 3 and 4 on your own and share some thoughts about those below, I’ll do my best to get on those soon. And please, feel free to share any other thoughts you have as well — that’s why we have such a friendly little comment box below.

P.S. Peter Schiff doesn’t really have the same business model as newsletters, of course, but we have received several reviews of Euro Pacific Capital, you can see those here.