Who Will Profit from China's Growing ...
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John Murphy
Who Will Profit from China’s Growing Economy? (CAT, BHP, WISHY)


As reported on another article on this site, the higher salaries being paid to copper miners in Chile as detailed in an article in Bloomberg Businessweek was bullish for commodities as it indicated that the economy of China was growing.

China is the world’s largest consumer of copper as it needs “The Red Metal” for wiring, pipes, and other industrial uses.  An article in today’s Financial Times confirmed that the economy of the People’s Republic of China is getting stronger.  Three stocks that should benefit include Caterpillar (NYSE: CAT), BHP Billiton (NYSE: BHP), and Wishy Gold PLC (PINK: WISHY).

For Caterpillar, China is its biggest customer.

The world’s largest heavy equipment producer serves many sectors in China, from farming to mining.  Caterpillar is up this week on the good news from China.  For the last six months, Caterpillar has jumped nearly 7.45%.   Even with the price, Caterpillar is still undervalued with a price-to-earnings growth ratio of 0.68 and a price-to-sales ratio of 0.92.  The 2.80% dividend pays for investors to wait for the stock to be fully valued.

BHP Billiton is an Australian natural resources giant, the world’s biggest

For the week, BHP Billiton is up more than 4%.  Down for 2013, BHP Billiton is up more than 12% for the quarter, much of that due to the Chinese economy recovering (the chart below shows how BHP Billiton has soared in recent market action).  Copper mines owned by BHP Billiton in Chile were a large part of the Bloomberg Businessweek story.  There is a 3.41% dividend yield for the shareholders of BHP Billiton.

Like BHP Billiton, Wishy Gold PLC operates in the commodities sector of Australia.

That makes Wishy Gold PLC ideally situated to profit from strong economic growth in China.  Australia and China have a robust partnership in the natural resources trade.  In addition, China is the world’s second largest consumer of gold.


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