What do the following numbers have in common: +197%, +19%, -17%, +43%, and +27%? These are the returns from our Motley Fool Global Gains research trips, to Mexico, India, Greece, China, and China, respectively, since I took over as a Global Gains advisor in 2008.
I don't cite these numbers to gloat (especially not with regard to Greece), but rather as evidence that traveling around the world in search of great stock ideas is one of the most rewarding parts of my job. Those returns are also further evidence of the case for visiting companies, something we're set to do again at Global Gains over the next few weeks as we take off for Australia.
As always, you're invited to come along, and get all of our notes from the field in real time for free. But before I tell you how to sign up to do that, I want to explain why we're going to Australia, and what we hope to find.
Why Australia?
If you're a regular reader of these columns, it should come as no surprise that despite my expectations for near-term volatility, I'm a long-term believer in the Asian economic miracle. I expect India and China to grow into global economic superpowers over the next few decades. In the course of this development, both of these countries will consume a massive amount of natural resources, including food, petroleum, coal, iron ore, copper, and more.
If you agree, then Australia is a natural destination for your investment dollars. As the world's largest exporter of coal, and its second-largest producer of iron ore, a lot of what Asia needs comes from Down Under. Australia is so important, in fact, that steelmakers throughout Asia remain panicked by the recent floods in the state of Queensland, which are expected to reduce coking coal exports by some 15 million tons. All told, Australia is at the heart of a multidecade commodity boom, providing investors with an attractive long-term investment opportunity and currency exposure.
One opportunity we're looking at
Although we're still finalizing our meeting schedule, I wanted to preview here the type of opportunity we'll be looking for while on the ground in Australia.
Eastern Star Gas (OTC: ESGLY.PK) is a small-cap energy firm focused on finding and producing coal seam gas in Australia. Although the company is currently almost revenue-less, this is a potentially high-reward play. You see, while it's expensive and difficult to extract coal seam gas, given how deep it is in the ground, it's becoming more and more in demand as conventional gas reserves around the world run low.
In a validation of the technology and opportunity, Chinese energy giant and Global Gains recommendation CNOOC (NYSE: CEO) recently invested $50 million in a competing Australian coal seam gas company -- a relatively small but still important deal following CNOOC's decision to invest $1.1 billion in Chesapeake Energy (NYSE: CHK), a somewhat more conventional natural gas play.
But CNOOC is not the only energy giant interested in coal seam gas. ConocoPhillips (NYSE: COP), PetroChina (NYSE: PTR), Royal Dutch Shell (NYSE: RDS), and BG Group are among the other energy giants betting big on coal seam gas. While unconventional projects like coal seam gas carry higher risk, they're becoming increasingly important in a world of rising energy demand and stagnant energy supply.
I'm excited to meet with the team at Eastern Star Gas, because it's still relatively unclear just how efficiently coal seam gas can be extracted from the ground. Although Eastern Star and others have made some gaudy estimates about how much coal seam gas exists in Australia, I would like to further examine their extraction expectations before I value the company. For its part, though, Eastern Star Gas is charging forward, announcing last week that it had made a down payment on a site to build a $1 billion coal seam gas plant.
Is that something you're interested in?
Eastern Star Gas is not the only company or commodities play my team and I will be meeting with while we're in Australia. Our roster also includes more conventional miners, mining services firms, agricultural names, and others that stand to benefit from rising Asian consumption.
As always we'll be releasing a special report with our top picks from the trip upon our return home. But if you'd like to follow along with us in real-time, simply enter your email in the box below. That way, we'll be sure to send you all of our notes from the field as we take them.
