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There's no question that I consider some American companies to be great investments right now. Some have strong business models, defensible niches, and great products. But one thing they don't have going for them is a sound economic backdrop. Unfortunately, the U.S. just isn't roaring ahead right now.

Meanwhile, Asian economies show no sign of slowing down. And that's why I advocate paying attention both to the companies that are based there and the American companies that are doing business there ... the right way. More on that in a moment.

First, I want to tell you about ...

Three Asian Industries That

Look Absolutely Unstoppable!

As an investor, you get to put your money to work in practically any kind of business imaginable. So, here's an important question: What kind of businesses in Asia look poised to grow? My answers ...

Construction: You need look no further than China to understand why this industry has such great prospects. The country is throwing up giant skyscrapers ... paving new roads ... and building new power plants.

Maybe you think it's too late to get in? Well, if anything, I think activity will pick up ? not slow down ? as the 2008 Olympics approach. We still have another year or two left in this cycle, and that's plenty of time for some of these stocks to double.

Cargo and Containers: One trip to Wal-Mart will prove that China has become the world's manufacturing center. Today, just about everything on store shelves was made in China (or some other Asian country).

But it's hard to consistently figure out who will make the next hot product. That's why I like companies involved in transporting goods from factory floors to store shelves.

Investors have tons of choices here. They can buy shares of companies that run China's toll roads. They can put their money into railroad companies. And they can also consider port operators, since almost every item eventually boards a ship.

Of course, I do like some manufacturers and retailers. Particularly the ones that cater to ...

Chuppies: Asia is all about consumption. Every time I visit, I'm bowled over by the sheer volume of shopping going on. I'm not talking about people buying crappy t-shirts, either.

Instead, Chinese yuppies (I call them ?Chuppies?) are greedily snapping up cell phones ... staying at lavish hotels ... gambling at casinos ... and sporting expensive jewelry.

At this point, you might be thinking that U.S. companies should be making a killing off of this new market. Well, some are. But others are coming up short. Here's why ...

Some American Companies Just

Don't Get Asian Markets

Take restaurants ? like their U.S. counterparts, Asians love dining out. However, many U.S. restaurants have found it difficult to operate in places like China.

One major problem is adapting a menu to the very localized Asian taste buds. Heck, you won't find pigeon, duck tongue, or dog on a Burger King menu in the U.S., will you?

It's also hard to adapt to a completely different culture in other ways. Advertisements that would be harmless in America can tick off the entire population of another country. For example, Nike ran a TV spot that showed NBA superstar LeBron James playing and defeating a computer-generated Kung-Fu master. People were so insulted that the Chinese government banned the ad.

And I haven't even gotten to the business environment, which can be downright cut-throat! Look at what happened to Best Buy when it tried to open its first Chinese store:

The company was going to take over a prime Beijing commercial space that was vacated by Ikea ... until Gome, a Chinese retailer, heard about it. To add insult to injury, Gome leased the place for $2.5 million a year even though Best Buy had been offering four times as much. Preferential treatment for a local firm? You be the judge.

My point is that succeeding in Asia is a lot more complicated than opening an office or hanging up a shingle. As an investor, you can't assume that every company with a strategy for China will succeed. And you've got to be especially careful when you're getting your stake in Asia through your U.S. holdings.

Don't worry, though ...

There Are Five Easy

Ways to Invest in Asia

I want to make something clear ? I'm not suggesting that you abandon all of your U.S. holdings, even the ones with absolutely zero exposure to Asia.

However, I do think it's foolish to have your portfolio entirely invested in any one country, especially if it's the slow-growing U.S. There's no excuse for that nowadays. Not when you have so many ways to invest abroad. Here are just five of the ways to invest in Asia:

First, you can buy a mutual fund that's focused on either one or more Asian countries. Three I like are U.S. Global's China Region Opportunity (USCOX), Fidelity's China Region (FHKCX), and T. Rowe Price's New Asia (PRASX).

Second, consider exchange-traded funds. These investments give you a diversified stake in specific regions, they're easily bought and sold, and they generally carry lower fees than mutual funds.

Third, you can buy shares of Asian companies that trade on American exchanges. Many come in the form of American Depositary Receipts (ADRs), which are U.S.-listed stocks that trade exactly like their foreign-listed counterparts.

Fourth, if your broker has a foreign trading desk, you can buy shares of Asian companies that are listed on foreign exchanges. This isn't nearly as hard as many people think. A lot of the most attractive Chinese companies are listed on the Hong Kong Stock Exchange, but some can also be found on exchanges in Singapore, London, Shenzhen, and Shanghai.

Fifth, there are some American companies that are getting it right overseas. You've got to choose carefully, but U.S. firms with strong presences in Asia are one last familiar way for you to get a stake in economies that are absolutely trouncing the paltry growth happening on American soil.

Best wishes,

Tony

P.S. If you want someone to help you find the best Asian investments, consider subscribing to my Asia Stock Alert service.

--------------------------------------------------------------------------------

About MONEY AND MARKETS

MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.

Tony Sagami

Tony Sagami, the owner and founder of Harvest Advisors, an investment research and money management company, has been managing money for more than 20 years and is one of the early pioneers in the application of technical and quantitative analysis to mutual funds and stocks.

Prior to establishing his own firm, Mr. Sagami was managing director at W.E. Donoghue & Co, serving additionally as the Director of Investment. During his successful career, he also held the position of account executive at Merrill Lynch.

Mr. Sagami has been frequently quoted as an expert and is appreciated for his frank, consumer-friendly views. He has appeared in publications such as The Wall Street Journal, Barron's, Kiplinger's, Smart Money, Business Week, New York Times, Washington Post, Investors Business Daily, Bloomberg, Financial Planning Times, Mutual Funds Magazine, Chicago Tribune, LA Times, and many others.

Mr. Sagami holds a degree in economics from the University of Washington.

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Ways To Invest Money

Now that the spot uranium price has sustained above $40/pound, after a 20-year drought and a bottom of $6.40/pound at the end of December 2000, hundreds of junior exploration companies have thrown their hat (and possibly your money) into the ring. Both Canadian and Australian junior uranium companies hope to raise the big money required to bring a uranium property into production. A perceived uranium supply crunch has added to the frenzy. As occurred with previous uranium cycles, only the strong will survive.

While numerous Canadian junior exploration companies hope to find a new discovery in various uranium-prospective regions through Canada, one of the safest investment strategies is to speculate on those companies, whose properties were drilled during the previous uranium bull market (1974-1980). Many of those properties had uranium deposits delineated by major oil and uranium companies, who did not blush at spending tens of millions of dollars to find uranium.

Some of these companies acquired the drilling databases and the properties, which were abandoned over the past twenty-year uranium depression. Some of those companies have been actively moving their projects forward to production, using a more environmentally friendly mining method than the conventional mining of an open pit or underground mine. It is called In Situ Leach (ISL) mining, or solution mining. An ISL uranium operation is much like a water treatment plant, where oxidized, or carbonated, water is pumped into a uranium orebody and uranium is flushed into a uranium-treatment plant. These are relatively inexpensive to install, possibly for as little as $10 million, and can be economically operated during the current uranium boom.

There are pitfalls when investing in those companies which plan to establish ISL operations. During the initial phase of this bull market, a common myth circulated among investors had been ?pounds in the ground.? How many pounds of uranium oxide, or U3O8 for short, does a company have in the ground? The more pounds a company claimed, the higher its market capitalization ran. Bigger is always better in most cases, but recovering uranium through an ISL operation, like any other mining operation, has its problems. Once you can sift through the companies with very real prospects from those who are cheerleading their ?pounds in the ground,? you will have narrowed down your list of potential investment vehicles.

These are the four key questions that must be answered if you wish to minimize your risk when investing in uranium stocks:

? How permeable are the ore bodies you plan to mine?

? What is your average grade?

? Over what area does your rollfront extend?

? What is the depth of your ore body?

One of the most important factors to consider, once you believe there may be a uranium-mineralized orebody on the company's property, is the permeability of the sandstone, from which the uranium will be mined. Permeability is the flow rate of the liquids through the porous sandstone. Knowing what the permeability of the orebody will let you know how much water you can get through the sandstone formation. Uranium Energy Corporation Chief Operating Officer Harry Anthony, an internationally recognized ISL expert, noted, ?You need higher grade ore for tight formations. With high permeability, you can space your wells further apart.?

The make-break point for a formation's permeability is its Darcy rating. How high is the Darcy? A typical Darcy can range from minus 1000 to plus 3. The higher the Darcy, the more permeable the formation. This helps determine how economic the orebody is. An acceptable range would be one-half to one Darcy. What is a Darcy? Uranerz Energy Chief Executive Glenn Catchpole, who is also a hydrologist, said, ?It is gallons per day over feet squared.? He added a pure hydrologist would calculate the feet per day or centimeters per second to get a more accurate permeability assessment. However, the Darcy is a widely accepted measuring unit in the industry.

With low permeability in a tight formation, you may need to space more wells in a typical well field pattern. How much does each well cost? That depends upon the depth of the roll front deposit. While explaining that costs are fixed and variable, Anthony computed the cost of a production well for a 500 foot deposit at $15,000. An injection well could cost $11,000 to install. By comparison, in New Mexico, where the deposits are wider and of higher grade, a 2000-foot production well might cost $27,000 and the injection well could cost $18,000, and it would still be economic. Obviously, the deeper the deposit, the more it will cost to extract the uranium. Not only will the capital costs increase, but operating costs will be greater.

Uranium grades can be a contentious point. ?Grade is the driving force,? Harry Anthony shot back. We asked him about companies which said they could run an economic ISL operation with grades as low, or lower than 0.02. Anthony laughed, ?They are crazy. They'd be out of business before they started.? Catchpole was more reserved in responding, ?It probably wouldn't have an economic recovery.? Strathmore's David Miller offered a more technical analysis, ?Frankly, that will not likely have enough recoverable pounds. The operating grade feeding the plant will be too low.? What is the best grade? Miller wanted to see properties with deposits that average on the order 0.5, 0.10, or 0.15. ?It depends upon the deposit,? Miller added.

Uranium grades can impact the cost of operating an ISL plant. Anthony gave an example of an ISL plant operating at 5000 gallons per minute. Running 24 hours daily, the plant would process 7.2 million gallons of water. That's more than 2.6 billion gallons of water processed every year. Operating costs are based upon cost per thousand gallons of water. ?This includes electricity, reagents and labor,? said Anthony. On a daily basis, it would cost more than $21,000 to run an ISL plant, based upon Anthony's calculations of $3.03 per thousand gallons of water. Using a 5,000 gallon per minute scenario, a plant might produce 2360 pounds of U3O8 every day or 80,000 pounds monthly. The cost to produce each pound would be $8.18. Using that math, the uranium grades would be about 44 parts per million (ppm) or 0.08. Anthony said, ?I like to see 70ppm or higher.? That comes to a uranium grade of 0.13.

Another way to evaluate a company's uranium property is looking at each part of its development costs. In a well field pattern, Strathmore's David Miller can determine the economic viability of the ground. ?The keys to what is recoverable are: (a) how many pounds are recoverable per pattern? And (b) what does it cost to install a pattern?? Miller explained. ?If you have 10,000 pounds in place and can recover 8000 pounds, your well field development cost can be $8/pound, if it costs you $80,000 to install that pattern. Add your operating cost, capital amortization and restoration cost, and you would have a total cost.?

Finally, the cost to install a pattern also depends over how much territory your uranium deposits run. ?Ten million pounds over an area of one-half mile will cost less than those same pounds over an area of two to four miles,? remarked Terrence Osier, senior geologist for Strathmore Minerals. ?That means more injection wells and more production wells.? Depth of the wells influences its installation cost, as mentioned previously, and impacts its daily operating cost. ?When uranium costs were very low, a few years ago, a company needed 70,000 pounds per pattern,? Harry Anthony commented. ?Now a company might only need 20,000 pounds per pattern to make it economic.?

There are many variables within the above advices provided by these experts. However, the important point to realize is the time of hyperbole and hoopla over ?pounds in the ground? has passed. As more uranium development companies move closer to establishing an ISL operation, the go/no-go consideration, as UR-Energy Chief Executive William Boberg aptly described it, will come down to permeability. After that, the economics of a project will either make it viable or not. Using the criteria we've provided, you can avoid the hysteria by speculating with the odds stacked more in your favor.

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