The Motley Fool has an investment newsletter called Global Gains, by Bill Mann, that offers up international investment advice for $199 a year, and they recently have been advertising the service by teasing up three different small cap companies, what they call their “Hidden Advantage Stocks.”
(And actually, I seem to remember them advertising this for $399 last year … I could be wrong, but if true that’s a pretty harsh price cut … I guess they’re getting many more, or many fewer, subscribers than hoped)
But anyway, these company names are all released to you — as a new subscriber — in the special report called “3 Small Caps That Will Dominate the International Market.”
And of course, the first one, the alternative energy stock, will be revealed here by the Gumshoe … just let me blather a little first.
(And I do know the other two companies, too, I’ll try to write those up shortly.)
Anyway … the first one is Bill Mann’s favorite, and is a company that has “mastered a way to convert a plentiful North American resource into a clean-burning fuel substitute for gasoline, diesel, even jet engines”
It costs less than oil, and burns cleaner.
They made over $2 billion last year selling their fuel substitute.
“Sales have grown at an annual rate of 17% over the past ten years. Yet the stock is very low-risk, trading for less than 8 times cash flow.”
The technology this company works with is coal gasification, which can be used to turn coal into most of the petrochemical products the world needs.
And if you haven’t heard it recently, I’ll remind you: the U.S. is the “Saudi Arabia of Coal.”
And I’m not sure what analogy you might use, but China apparently is “the Venezuela of Coal” or something like that, because this service is hyped for it’s China business as well.
Some more clues: This technology lets us ” ‘do it cheaper than importing oil from sheiks, dictators, rats and crooks, said one U.S. state governor on September 29, 2006″
“The break-even point with this company’s technology is somewhere around $35 a barrel.”
And finally, “they’ve been refining this technology for more than fifty years!”
So what is this company — whose technology will soon be used in a U.S. plant (in Frackville, PA, a name I couldn’t make up)?
And before the Gumshoe reveals all, let me remind you that the Fool believes this is time sensitive — “Shell, ExxonMobile, ConocoPhillips, Marathon, and Chevron are trying to strike a major deal with this company” to use their patented gasification technology.
Still guessing? Well, there aren’t that many companies in this business, and this one is …
Sasol, Ltd. (SSL)
I have never owned shares of this one, though I’ve looked at it and the somewhat related US firm Headwaters once or twice in times past. Sasol’s story is actually an interesting one, since it was largely the exclusionary apartheid policies that built their technology: South Africa has access to plenty of coal, but no oil, and when few countries would trade with South Africa they had to either come up with a fuel alternative, or change their policies.
Thankfully, they eventually did both — though in the wrong order, most would argue.
Sasol’s technology is indeed appealing for the two huge oil importers that have large coal reserves — that being the U.S. and China. But I don’t really know to what extent their technology is protected by enforceable patent, or is really much better than the technologies of their competitors. It is, at least, not just an idea — this is not a fly-by-night bulletin board stock like so many that the newsletters hype, they actually make the stuff.
And they’re profitable — SSL is cheap by most measures, trading at a forward PE of under 10, with a decent dividend … and it’s also one of the few African stocks you can buy as an ADR in the states, if you’re looking to diversify in that way (one of the other big ones, the media company Naspers, is in my portfolio, not that that should be particularly relevant to you).
I don’t know anything negative about this company, other than the fact that it’s business is kind of dirty and grimy, and for whatever reason they have not yet gotten much U.S. attention … but if you’ve got the scoop on Sasol feel free to opine here. Good luck, all.
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.