Invest in Minerals Without Borders

12/12/2011 12:25 pm EST


Roger Conrad

Chief Analyst/Managing Partner, Capitalist Times

The commodity wealth of Canada and Australia will boost their economies and currencies alongside these three long-term winners, says Roger Conrad, editor of Canadian Edge.

US-based investors are often looking at US markets, of course, but there are other opportunities out there internationally that you should be looking at. Our guest today is Roger Conrad, to talk about some of those. So, Roger, where do you see some opportunity outside the US for investing?

Well, I like a couple of countries, Canada and Australia. I like them because I'm a bull on natural resources. I think we've entered a new era where the US is no longer the primary consumer of these materials, from energy to copper, iron ore, coal...all these various things are being consumed by Asia.

And both of these countries are really benefiting from that. If you look at what happened in 2008 and 2009-you know, the worst recession, the most sudden drop in economic growth since the Depression-Canada was able to kind of sail through. Australia never even had a recession. The reason is, again, they were exporting to Asia, and Asian demand, while maybe flagging a little bit, remained very robust, so that's a huge growth story.

Both of those countries are treasure houses and there is a lot of potential development that can happen there. So, that's a very strong underpinning for the countries operating there. I like to buy businesses when I go into these various countries.

Both of these countries also have a regulatory regime and a legal infrastructure that is very similar to the US. It's very longstanding. It's very pro-investor, and that sets them apart from a lot of the countries around the world.

One thing when you're investing in resources is resource nationalism is on the rise, and that means countries-say, the Democratic Republic of the Congo, for example-nationalizing, basically, some properties owned by a Canadian company. That's the kind of thing that can happen. Australia and Canada, not so much.

You also have a favorable currency situation because these countries, by exporting so many resources, their currency value tends to follow demand for resources and prices of resources. If you own, say, a dividend-paying stock in Canada or Australia, the value of that dividend in US dollars is going to rise as those currencies rise. So it's actually a little bonus dividend increase.

So, robust businesses, lots of growth, nice currency angle, and both of these countries are actually, because of their position in resource markets, they're actually safer than, say, the US, where you have more trouble in the banking system, more trouble with fiscal balance, and so forth.

They also have more stable governments, particularly in the case of Canada. So, lots to recommend from those and a lot of opportunities for investors.

How about some specific symbols you like in each country?

Most of the companies that you're going to buy for either one of those countries are going to be traded over the counter. There are some New York stocks that I think are interesting.

Starting with Australia, there's a company called Telstra (TLSYY), and it's sort of the AT&T (T) of Australia. They're expanding. They're doing very, very well in a number of areas, particularly in broadband wireless and so forth.

They have a deal with the Australian government that's going to give them roughly $11 trillion as they build out their national broadband network there. So, that's kind of a nice windfall for investors.

The dividend is pretty close to 10%. They pay twice annually, so you have to wait around for it, but it's very much worth that.

You know, turning to Canada, you have a lot of companies that pay dividends every month. I like that even better. A couple of companies I think people should take a look at...

One would be Enerplus Resources (ERF), and they are an oil and gas producer. Big presence in the Bakken region. Major light oil discovery, and they have a lot of potential to ramp that up going forward.

And then another one would be Atlantic Power Corporation (AT), also New York traded. They are basically a generation company. They own power plants. They sell the output to creditworthy customers-big utilities and so forth-by locking in revenue. You lock in that revenue, higher dividends, higher share prices. A very nice formula for that one.

Enerplus may be a little riskier because of the oil and gas. They depend on oil and gas prices. They are also very, very low debt, so for a conservative investor that wants to make a bet on energy and wants some income, I think it's an excellent choice.

Related Reading:

The Great Dividend Gold Rush
4 Ground-Floor Ways to Invest Globally
How Long Can the World Avoid Crisis?

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