Aluminum Corp. of China Limited (ADR) (ACH)

TMFSinchiruna (90.70) Submitted: 11/24/07 1:44 PM : Start Price: $50.78 ACH Score: -46.97

It's been dramatic watching investors flee from this solid company, and I've been happy to buy their shares on the way down. I'm thinking we've already hit or will soon hit a bottom, and valuation looks very compelling here at just above $50. Need I point out the stock hit $90 just over a month ago? What's changed since then? Have long-term forecasts for China's growth changed substantially? No. In fact, the Chinese have announced steps like limiting credit to restrain growth and thus avoid a big bubble.

What has changed is the mindset of the American investor, who's risk tolerance has been shaken by the credit crunch and major red flags emerging from the financial sector which suggest an imminent recession in the US. But I see pulling out of a Chinese ADR and moving into some traditional safe haven asset like bonds as foolhardy, especially since US bond yields will not even keep pace with the REAL rate of inflation (which is much higher than what the Fed reports). ACH is about as low risk as one will find in today's markets. Their acquisution of Peru Copper last year was a great move for them (I had owned CUP and was very bullish on it). Their P/E is just over 4.25 right now... dirt cheap.

So, while investors have been hammering down Chinee ADRs lately, I'm gleefully watching the ones that relate to commodities and picking them up at a great discount. If more Americans would line up to buy stocks like ACH on black friday instead of waiting for Target to open its doors, then I feel more of us would be ready for the financial turmoil which lies ahead.

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