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The Best Values in China

Nathan Parmelee (TMF Doraemon)
May 31, 2008

This may not be news to you, but I'll lead with it anyway.

China's stock market has been on fire the past few years, and all things China in our markets have enjoyed a similar, rapid rise. Many have come back to Earth, but even China Unicom (NYSE: CHU  ) , China's second-largest wireless services provider, has returned more than 50% in the past year.

This next bit, however, may come as a surprise.

There are still fantastic long-term growth opportunities among Chinese companies. With the Chinese market close to 50% off its highs, and other Asian markets off 20% or more, now is the time to be digging.

Where you won't find them
Picking up shares of infrastructure and commodity companies in China was a no-brainer over the past few years, but those companies are no longer cheap. Too many investors have caught on to the global boom in building.

What's more, current valuations suggest that many investors expect the growth in buildings and infrastructure to continue unabated. This means you need to tread lightly with ABB (NYSE: ABB  ) and other infrastructure plays; these are still cyclical companies with high fixed costs.

Instead, look to luxury
Iconic American names such as Nike (NYSE: NKE