“Cash In on China’s $608 Billion ‘Dragon’s Thirst’” (Chris Mayer)

By gumshoe, August 25, 2011


Here’s the latest pitch from Chris Mayer for his Mayer’s Special Situations newsletter:

“It’s the ONE resource more precious than oil, natural gas or gold. Without it, China’s growth — and the world’s — will likely come to a screeching halt.

“Read on to discover the ONE tiny penny stock that has the breakthrough technology that could quench the ‘Dragon’s Thirst’…”

You’ve probably already guessed what that “one resource” is, yes? Just in case you don’t believe the hype, Mayer also includes a quote from Forbes right up at the top of his ad:

“[The Dragon’s Thirst] promises to be to the 21st century what oil was to the 20th century: the precious commodity that determines the wealth of nations.”

And yes, the dissembling with the mysterious “dragon’s thirst” language lasts only a few paragraphs — Mayer does tell us that he is, as you suspected, talking about water. And if there’s one thing that we’ve had hammered into our brains at least since the runup to the Beijing Olympics, even by the mainstream media, it’s that China’s water situation stinks. Their groundwater is heavily polluted, much of the north is an encroaching desert, people are moving to cities and demanding more and cleaner water, industrial and agricultural demand (and pollution) is out of hand and expected to only grow as employment and food production are key to preventing unrest… ths list goes on, and Mayer spends several pages giving examples and data points to buttress his argument.

But you’ve probably heard much of it already — China desperately needs more water treatment capacity, among other things, and it’s willing to pay for it. That’s where our “cash in” moment is supposed to arrive:

“According to China Daily, that’s why they recently allocated a massive $608 billion to upcoming water projects. “

And just to give a bit more of the lead-in to get you excited, here’s a taste of Mayer’s spiel:

“Water pollution is so bad in China that it sickens 190 million and causes 60,000 premature deaths every year.

“If ignored, this water pollution problem could lead to soaring health-care costs, lost productivity, unemployment and huge declines in agricultural production.

“And without a healthy, productive working population China’s future prosperity and growth will suffer.

“That’s why the companies that offer solutions to China’s water pollution nightmare… like the booming Asian-based company I recently uncovered… are poised to make a windfall of cash… as are a few lucky wealth builders.”

Sounds pretty good, right? We’ve certainly seen pitches for stocks that play off of demand for water before — it is, after all, an easy sell: we all know that water is the one essential ingredient for life, and that with a growing population and a more polluted world, the shortage of clean water should mean — if it’s anything like a free market — that water should get more valuable. And when things get more valuable, the people who own them, or who can help you create them or move them or service them, make more money.

Of course, water is also a special case — governments and populations are often willing to let water-related companies make good profits, particularly when that profit motive helps to build new treatment technologies, or new pipelines, or improve services … but when real shortages happen you’d have to think that there’s a limit. If Los Angeles runs dry, one imagines that California won’t let farmers charge the market rate for their water rights, because the seller’s idea of the market rate for water in a drought looks a lot like gouging and profiteering from the perspective of a thirsty populace.

But that may be just my personal peccadillo — something that has made me cautious about buying companies who rely on the value of their “water rights” and more interested in companies with water-related products or technologies. What we want to find out today is which water stock Chris Mayer is recommending now to profit from China’s huge spend on water treatment. How about some clues?

“This company is the NEW Microsoft of Water Technology… where you might have the opportunity to turn $50,000 into $950,000 with just this ONE penny stock.”

Sounds pretty profitable, no? Here are some more details:

“The bottom line is that this fast-growing Asian-based penny stock I just uncovered is on track to becoming the next breakthrough water technology company to score big gains.

“You could see gains of 1,900%… or more… with this tiny Asian water company with its breakthrough patented clean water technology….

“… priced under $2 a share….

“This company has created a proprietary clean water ultrafiltration technology that is poised for explosive growth in China and the rest of the world.

“An award winning technology that selectively remove things such as chemicals and particles from water… making the water ultrapure.&