China’s Growth Story: Don’t Read This Over Your Weetbix

Ask 10 investors the best way to profit from the rise of China. We bet they’ll give you 10 entirely different pieces of advice.

Some will tell you to stay away entirely. They’d have you believe China’s growth story is over, and that stocks linked to Chinese fortunes will crash. These punters couldn’t be more wrong.

Investors who swim in the mainstream might tell you to buy Aussie iron ore stocks. That’s a valid way to benefit from Chinese development…but every man and his dog has heard and understood that story by now. If you want to reap the kind of investment returns that can change your life, you need to dig deeper.

At Money Morning, we scout ahead of the pack and bring you tomorrow’s biggest investment trends. Right now, we’re staring at one that might make you uncomfortable. But that’s a great sign that it could also pay off in spades…

Three weeks ago, our colleague Shae Smith brought you up to speed on one developing trend.

Shae produced an eyebrow-raising report on why Bill Gates drank a glass of water distilled from human fecal matter.

(Do you see now why we told you not to read this over your Weetbix?)

Bill had a good reason for drinking it down. He was proving a powerful point. Bill wanted to show that a new machine his foundation has funded could change the lives of millions, if not billions of people for whom clean drinking water is an impossible dream.

It’s hard for us to comprehend in Australia. But it’s the daily reality for millions of people worldwide. They either take the risk of drinking filthy waste water, or avoid the risk and die of thirst.

Here’s the good news. Science, finance and technology are aligning to solve this problem. And the rewards for those who crack the code will be enormous…

Turning human waste into ‘black gold’

Beijing’s city planners are finding creative ways to deal with toilet refuse. Necessity has pushed the Chinese to the fore in applying new ways to convert human waste into fertiliser and biogas.

Here’s what we mean when we say ‘necessity’. In 2013, the number of Chinese urban dwellers crossed 731 million, overtaking the rural population by more than 100 million. The country’s capital, Beijing, has seen its population double to 21 million in the past decade. It’s a staggering amount of people moving into close quarters over a brief period.

To keep its cities running, China essentially needs to build the entire sanitation infrastructure of Australia — a structure built over centuries — every couple of years.

All that dung gives China’s city planners a serious mountain to climb. That’s behind the growing push to repurpose people’s ‘business’ into energy resources or fertiliser. The tech already exists, and it’s processing more and more content every day. By some estimates, the amount of human excrement treated and converted into fertiliser and biogas every day is enough to fill three Olympic-sized swimming pools.

So what does this have to do with your investment strategy? Well, much like the Aussie gold rush of the 1850s brought droves of Chinese punters, the ‘black gold’ going through these machines could make Aussie speculators rich in 2015…

Gathering pace

You see, these processing plants are only one prong to the Chinese water management strategy. And the story is only just gathering pace. China has pledged $330 billion to fight water shortages…and when the Chinese government decides to do something, they do it.

We suspect that’s why the research team at Credit Suisse Group AG [NYSE:CS] wrote in October that the business of key Chinese waste treatment operators should grow by as much as 400% in the next five years.

That growth will make investors in a range of companies rich. And here’s a hint as to where you might start looking, before the revenue and profit starts to gush.

The chart below shows how much the same researchers believe the environmental problems will grow, and where the potential solutions lie…

You might look at that chart and feel more confused than before about how to play this trend. But the simple fact is that many different firms will win the work and reap the rewards.

Through your editor’s work on Australian Small-Cap Investigator, our emerging stock advisory service, we’ve found one speculative Aussie stock in the box seat to benefit from this growth.

It recently signed agreements with a Chinese government body to start rolling its treatment plants out in the Middle Kingdom…and this business is just one of many exciting irons in its fire.

It’s a speculative punt, sure. But if you want to scoop the biggest gains, you have to get ahead of the game and investigate these stocks.

If you want to find out the stock we’ve uncovered, its ticker symbol and how you can invest,go here to find out more.

Cheers,

Tim Dohrmann,
Editor, Money Morning

Read the rest of this article at Money Morning