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China, the Olympics and Stock Options

The 2008 Olympics in Beijing, China will potentially offer companies unique business opportunities, even after the Olympics are over. China is undergoing an economic revolution and industrial boom. Companies that can meet the challenges that come with this rapid growth could benefit financially.

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Recycling Companies
Companies that are into recycling materials such as paper, plastic, aluminum and scrap metal are seeing a booming demand for these goods from Chinese companies. These companies are purchasing recyclables in bulk from US recycling facilities and shipping it to China. These recyclables are then used to produce Chinese domestic goods and to make packaging material, goods, and toys for export. Companies such as Waste Management (WMI) collect residential recyclables and sell them to bulk recyclers for a profit. A covered call investing position is available for WMI for September stock options expiration with a potential return of 2%. Bulk plastic recycling buyers/seller companies such as Atlas Recyclers, Inc., Alternative Plastic Services, EEI Recycling, Inc., PlastiCycle Corporation, Enviroplast Inc., and Vikoz Enterprises could see business expand as the plastic recycling markets expand. Two Los Angeles County paper export companies America Chung Nam Inc. and Allan Co. have benefited greatly with their export of old paper to China. Aluminum export companies such as Alcoa, Inc. (AA) and member companies of The Aluminum Association stand to also benefit from China’s economy. A covered calls position with September stock options expiration is available for Alcoa with a potential return of 3.3% with 7.4% downside protection. As long as the price of Alcoa’s stock does not decrease more than 7.4% in price at stock options expiration, the covered call investing position will remain profitable.

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Alternative Energy Companies
China is starved for power. It is currently using its vast coal reserves to power the current industrial boom. The coal however is a highly polluting type and no air pollution control devices are used on Chinese factories. This has led to widespread air pollution in major Chinese population centers. China is now exploring alternative energy sources to reduce the pollution that has many athletes concerned about performing in the Olympics. Companies that have state-of-the-art technology in wind and solar power look to be very attractive partners in China. Companies with a world presence in solar technology are: General Electric (GE), BP Solar (BP), Kyocera Solar (KYO), Sharp, and Siemens (SI). Companies with a world presence in wind power technology are: Vestas, Gamesa, General Electric, and BP. Covered call investing positions with September stock options expiration are available for GE, BP and SI with potential returns of 2.5%, 2.2% and 3.4%, respectively.Air Pollution Control Device Companies
The Olympics has spotlighted what an enormous challenge the Chinese are facing to control their massive air pollution problem. Chinese companies may soon face the pollution control mandates that US Companies started to face back in the 1970’s with coal-fired power plants. US air pollution control devices now prevent the massive pollution the Chinese are witnessing. Companies that produce scrubbers, particulate control devices, NOx control devices, VOC abatement, Acid Gas/SO2 control devices, and Mercury control devices would find a ready market in China. Companies such as Cormetech Inc., and Anguil Environmental Systems could expand into China.

Auto Emissions Control Companies
China has seen explosive growth in the number of private automobiles owned by private citizens. Most of these have no emission control devices. Everyone in the US remembers the pre-catalytic converter pictures of Los Angeles. The Chinese government is working to get rid of the worst polluters but most cars will require some kind of pollution control device and testing to make sure it continues to work properly. Most of the converters however are made in China, South Africa, India, and Taiwan. One would need to find respected companies on an international exchange to invest in this sector.

The Olympics could benefit various companies bottom line. With further investigation of a company’s world alliances, they could be potential investments. The Olympics will spotlight the ones that have immediate challenges and potential benefits.

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[tags] Olympics, Beijing, China, Atlas Recyclers, Alternative Plastic Services, EEI Recycling, PlastiCycle, Enviroplast, Vikoz Enterprises, Los Angeles, America Chung Nam, The Aluminum Association, solar, wind power, air pollution, Cormetech, Anguil Environmental Systems, Chinese government, pollution control, South Africa, India, Taiwan, AA, ALCOA Inc., BP, British Petroleum Co., GE, General Electric Co., SI, Siemens AG, WMI, Waste Management Inc., covered call investing, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]

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