March Idea of the Month: Aussie Picks and Shovels

By Travis Johnson, Stock Gumshoe, March 18, 2011

This month we have a smorgasbord of possible ideas and stories for you — you can see from my personal activity that I’ve been buying several stocks this week, including adding to my positions in Sprott Resource Lending (SILU — the “idea of the month” for February) and Corning (GLW), and opening a position in O2Micro (OIIM), the ridiculously overhyped “Chi-Tab” stock that has finally fallen back to what I think is a reasonable price.

And of course, the stories out of Japan have everyone’s attention this week — from uranium panics to broader concern about the global economy, from worries about Japan’s currency to concerns about whether Apple will get enough flash chips for the iPad 2 rollout … every story seems to have a connection to Japan’s crisis in some way, and nearly every stock has taken a hit on the global concern. Value investors are now salivating over the bargains in Japanese stocks given their global presence and ties to China, though I can’t say that I’ve ever been particularly comfortable about most Japanese stocks, in part because of their incestuous relationships with each other and their corporate governance — their corporate interconnectedness and stonewalling of foreign or activist investors are indicative of the qualities that will probably help the country to rebuild with a collective effort and stoicism that’s rare elsewhere in the world, but they’re also generally turnoffs for passive investors who’d rather see returns on capital than cozy corporate connections.

So no, I’m not going to tell you to rush out and buy Japan — despite the fact that there are certainly some stocks, like Kubota (KUB) which looks like it might be getting teased now (I may write about that one next week, we’ll see how the tease rolls out and if there’s interest), and Hitachi (HIT) which was teased a few weeks ago, that have attractive global businesses and have seen significant price drops this week due to both real and perceived threats to their operations. Nor am I going to try to pick the right price for buying uranium stocks at this point, though I shares some thoughts on a few of them in the article on the free site on Thursday.

Instead, I thought I’d focus on the stock that has most intrigued me as a possible commodity-service investment in recent weeks, the pick that ...

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