Atomic Number 29: “How to Cash in on China’s Massive Appetite for Copper…”

By Travis Johnson, Stock Gumshoe, November 30, 2010

Today’s tease has been forwarded by a handful (or a few hands full, I suppose) of curious readers — our teaser is Mitchell Clark for his Penny Stock Reporter, and in exchange for his special recommendation of a Chinese copper stock he’d like you to sign up for a subscription to his newsletter … at the “special test market rate” of only $89, naturally (has anyone ever paid the list price for a newsletter?)

But, equally naturally, some of us are simply curious about just which stock Clark is touting … and would prefer to find the answer at a price that’s a bit more, well, free-ish. That’s why you’re here, I imagine — or perhaps it’s just my friendly smile. The Lombardi folks (that’s his publisher) tend to be a bit light on the kind of precise clues that your friendly neighborhood Stock Gumshoe likes best, but that’s no reason not to take a crack at it, eh?

The ad says that this unnamed stock is “an amazing undiscovered and undervalued company that’s already found the solution to China’s copper shortage.” So that can hardly be a bad thing.

But there’s more … he goes on to make the “big picture” case, but I won’t bother you with all those details — it’s all the stuff you probably know already, about how China is voracious in its demand for copper (which, yes, does have atomic number 29 — so I’ll offer a grudging “thanks” to Clark’s copywriters for making this the third time I’ve had to look at a periodic table in 20 years … the first two reunions with this high school chemistry nemesis were in the service of teasers about rare earth elements and lithium).

And we sure use a lot, lot, lot more copper than we do lithium — though that’s no surprise. The teaser tells us that the average US household includes about 90 pounds of copper in appliances and wiring, and that the average Chinese consumer uses only 9 pounds of copper wiring — which is not a particularly direct comparison, but we get the idea: China is rapidly urbanizing and building an electricity-hungry middle class and what’s likely to be a massive fleet of personal automobiles, which means they’re going to suck up a lot of copper unless someone comes up with a better metal to use for all that wire.

So that’s the backdrop, the tease says that the Chinese are building the “American dream on steroids” and that their copper consumption will continue to climb. So which company is our secret play on this trend? Here’s a bit of a tidbit, in Clark’s words:

“… someone—or some company—has to pull this stuff out of the ground, right? And then turn it into wire with a high enough quality to work in high-tech gizmos. And, if this company existed, wouldn’t it be in a perfect spot for exponential growth?

“Let’s face it, 10-fold growth is almost guaranteed based on the facts of China’s mega-shift from agriculture living to urban living.

“And one of the micro-cap stocks I’m most excited about just happens to be THE leading manufacturer of copper wiring and copper alternatives in China.

“Listen, I’m really excited to tell you about this opportunity…

“Because, the thing is, this company is already building factories to meet China’s huge demand for copper and copper wiring, and is perfectly positioned to profit from this mega-trend.

“In other words: the solution to China’s copper shortage is already in this company’s hands! It’s figured out a way to source China’s copper wiring needs, all at a fantastic profit.”

So that’s pretty much all we get by way of clues about the business — then we get a few more clues about the stock in this spiel:

“… even though it’s based in Mainland China, this company trades on the NASDAQ exchange, which means it’s easy for you to buy in just minutes.

“Plus, did I mention, IT COULD BE HUGE—Jackpot huge!

“But here’s the most important part…

“Unlike many other risky stocks from China, this company has cash in the bank, is debt-free, and is completely accessible. Anybody can check its books quarterly and listen to