Sin Stocks: 2 Profitable Vice Investments Soaring Despite the Recession

by David Fessler, Advisory Panelist, Investment U

Most of us aren’t compulsive gamblers, heavy drinkers, or chain smokers. Three habits that over time, are bad for your wallet and - more importantly - your health.

But from an investment standpoint, the so-called “sin stocks” - companies that make alcohol, firearms, cigarettes and those that operate gambling casinos - are doing quite well.

How well?

The International Securities Exchange SINdex (SIN), an index that solely tracks “sin” stocks, is up more than 30% since January…

This compares to the S&P Retail Index’s gain of just 15%. Against the broader S&P 500 Index, it’s done even better: up nearly 40% in just the past two months. And it’s up nearly 88% since its March low.

Perhaps your personal philosophy isn’t inclined toward vice or sin stocks. And that’s fine - there are plenty of

Harbin Electric, Inc., a company focused on developing and manufacturing a wide array of electric motors in the People’s Republic of China, announced that it has inked an agreement with a domestic Maglev technology company to co-develop a linear motor-driven freight train system for coal transportation. First, the two companies plan to build a 850 meter long testing line in a coal mine in inner-Mongolia.

Once the testing line is completed, the project is anticipated to expand to a 32 km long coal transportation line in inner-Mongolia. As terms of the agreement, Harbin Electric will provide linear motor driving systems including the motors’ primary and secondary components for the entire transportation line. For the initial testing line, Harbin Electric will deliver 5 linear motors to be integrated with the train as well as a total of 850 meter long secondary components to be installed on the train track before the end

BEIJING, The People’s Republic of China - At a time when the rest of the global auto sales are experiencing their biggest declines in decades - and are set to drop at least 8% globally - the burgeoning China auto market may grow by 10% or more this year.

With steeply rising disposable incomes and savings rates that approach - and in some cases exceed - 35% a year, it isn’t difficult to see why the China auto market is zooming along. But what may be tough for U.S. consumers to picture - especially as they deal with rising unemployment and a nagging economic malaise - is the intensity with which domestic demand is growing here in China.

Autos are more than just transportation here. They’re a symbol of wealth and success - a sexy status symbol. One’s social position can be determined by the type of vehicle one owns and

China Sun Group High-Tech Co., which through its wholly-owned subsidiary Dalian Xinyang High-Tech Development Co. Ltd (”DLX”) has the second largest cobalt series production capacity in the People’s Republic of China, announced that its R&D, engineering and technical team has successfully completed testing on the company’s latest energy power battery anode material, lithium iron phosphate.

Bin Wang, CEO of China Sun Group, stated, “DLX was pleased to have cooperated with three major domestic power battery production companies, two from Shenzhen and the other from Changxing, Zhejiang province, on this project. We are currently testing the stability and cycle curve of the battery, and are procuring the raw material to begin operations. We believe we are on schedule to commence full scale production of lithium iron phosphate in early April 2009.”

He continued, “We believe an immediate market opportunity exists for the lithium iron phosphate product to be used as an electrode material

Gulf Resources engages in the production of specialty industrial chemical products in The People’s Republic of China. Investors in the company were pleased on Monday following the release of some very promising fiscal 2008 fourth quarter results.

Along with revenues upwards of $24.1 million, which represents an increase over fourth quarter 2007 of more than 57 percent, Gulf Resources was happy to report a hefty gross profit of $9.9 million. That figure was a substantial year-over-year improvement of 61 percent. Cash-on-hand neared $31 million as well, along with a net income which overshadowed 2007’s number by 137 percent.

Company officials spoke to the press about the favorable report, as well as shedding some light on things to come.

“During the fourth quarter, our bromine, crude salt, and chemical product sales recovered as expected from the slump caused by the Beijing 2008 Olympic Games, allowing us to meet both our revenue

Genesis Pharmaceuticals Enterprises, Inc., a U.S. pharmaceutical company with its principal operations in the People’s Republic of China, announced that its CFO, Ms Elsa Sung, was featured in a live interview at the studios of Bloomberg TV Asia Pacific Channel. During the interview, she discussed recent health care reforms in China and Genesis’ growth strategies.

According to Ms Sung, the Chinese government intends to spend more than 850 billion Yuan on health care over the next three years. As part of health care reform, over 90% of China’s population is expected to receive health care insurance coverage from the national medical insurance system. This will benefit the public as well as the suppliers of medical products, particularly producers of OTC Traditional Chinese Medicines (TCM).

Until recently, Genesis only focused on developing, manufacturing and distributing western prescription drugs. However, now the company is adding new TCMs to its product line and has moved

Dynamotive Energy Systems Corp. (OTCBB: DYMTF) provides energy solutions through its offices in the United States and Argentina. The company’s pyrolysis technology turns biomass into BioOil for power and heat generation. Dynamotive Energy today announced a commercial agreement centralized on its pyrolysis technology, which will allow for the construction of the company’s first plant outside Canada.

“The first project in China marks an important milestone for our company,” Dynamotive Energy’s Chairman Richard Lin stated in the press release. “China’s economic development is in the world’s spotlight, and energy security and environmental protection are two major global concerns. As a leader in the bio-fuel industry, Dynamotive uses its patented technology to convert agricultural residues into valuable and clean renewable energy. The process makes use of non-food resources and creates no competition for land with food crops.”

The agreement will support the development of Dynamotive’s pyrolysis plant in the Henan province in

China Energy Corp. (”CEC”), through its subsidiaries, harvests and processes raw coal, as well as running a thermoelectric heat and power plant. CEC is an American-owned company that conducts it business in the Xuan Jia Wan District of Zhunger County, Inner Mongolia. This is an autonomous region of the People’s Republic of China, though power generation in the area is still highly regulated by the Chinese government.

The first of CEC’s two subsidiaries is known as The Inner Mongolia TeHong Coal and Power Company (a.k.a. “Coal Group”). By way of a major stake in the Lai Ye Gou Coal Mine, Coal Group currently produces about 500,000 tons of raw coal annually, though plans to enhance production and boost this figure to 1,200,000 are underway. It supplies large and middle-mass, as well as powdered coal to several power plants in the region. In 2007, the China Coal Industry Association named Coal

China Solar & Clean Solutions Energy, Inc. (OTCBB: CSOL) announced it has recently signed a contract, worth $3.5 million, to be the sole supplier of solar water heating systems to the Overseas Chinese Village in Shenzhen City. The contract was awarded July 1 to CSOL’s subsidiary, Shenzhen Peng Sang Pu Solar Energy Company, to supply and install its solar water-heating systems throughout the residential area.

“We are very pleased to have won this contract,” said Du Deli, CEO of China Solar & Clean Solutions Energy, Inc. “Despite bids from numerous competitors, we won the contract due to our strong reputation among Chinese solar energy experts. … We will continue to pursue similar projects and expect to win more bids in the future.”

The Overseas Chinese Village is a residential community that spans more than 125 acres and 22 high-rise buildings. The Village is the largest residential project in China to rely completely

China INSOnline Corp. (CHIO) is an Internet service and media company focusing on the People’s Republic of China insurance industry. Trading on the NASDAQ Capital Market with a current market capitalization of $148 million, the company uses localized websites targeting greater China. They provide, through Soobao, a network portal through their industry website www.soobao.cn. They offer online automobile, property and life insurance services through this site.

Soobao’s goal is to raise the national insurance consciousness and reduce the cost on national security in China. They do this by constructing and maintaining their network to integrate and optimize business flow throughout the insurance sales and related client services process. China INSOnline Corp., via Soobao, provides this portal to insurance companies, agents, and consumers for advertising, online inquiry, news circulation, online transactions, statistics analysis and software development.

Headquartered in Beijing, the company represents major insurance underwriting firms in China. China INSOnline