In Thursday’s Investor’s Business Daily, Jesse Emspak writes about three brand new Vanguard ETFs that track the 300 companies with the largest market capitalizations. Well, finally! I didn’t think the day when Wall Street begins to track the large stocks would ever come! (Before you close this article, take note of the sarcasm.)

I don’t get it. Is it just me, or doesn’t it seem like those old stodgy suits on Wall Street have enough ways to see how the big stocks are doing? I mean, what, if anything, does the Dow Jones Industrial Average track? How about the S&P 500?

Well, that’s fine. They can keep all their mega-cap indexes, ETFs, Spiders, etc. We’ll keep our Russell 2000. But when it comes down to it, who cares about indexes? How many investors need to track 300 stocks, let alone 2,000?

That’s why here at Penny Sleuth, we try not to get too philosophical about investment trends and what the market is doing. (Although I have to admit, it’s hard not to sometimes.) What get us excited are huge growth opportunities in small-cap stocks. So, that’s what I’ve got for you today…

Opportunity #1: The Only Company That Can Handle All of Canada’s Problems

The first company is one that was first mentioned in an article back in October, but is still going to have a big year this year. Currently, from the moment I first discussed it, it’s up 32%, but it has tons of room to grow. The company is Aecon Group, Inc. (TSX: ARE).

Aecon has been a leader in Canada, especially in the Toronto area, in various businesses, which include infrastructure, concessions, buildings and industrial.

The infrastructure segment of Aecon’s business includes road, highway and airport runway construction; building dams, tunnels and transit systems; as well as utility construction like water and sewer systems, telecommunication networks and even mainline gas projects.

Aecon’s concessions segment takes care of maintenance, management and upgrades that go along with the ongoing operations of certain infrastructure projects.

The company’s buildings segment includes projects like commercial office buildings, schools, hospitals and government buildings.

And finally, its industrial segment handles everything from industrial pipe manufacturing and platform/assembly construction to electricity-generation facilities that range from nuclear and fossil to hydroelectric.

The company has proven itself throughout Canada by efficiently completing projects like the Bruce Power Used Fuel Dry Storage Facility for spent radioactive materials (from the many nuclear plants in Canada). But, the company is also diving into international projects like the construction and maintenance (over a 30-year period) of a new airport in Quito, Ecuador and a cross-country highway in Israel.

This kind of experience and trust from the Canadian government, not to mention the international community, puts Aecon in a great position in the upcoming infrastructure boom.

Look for it to do big things in ‘08…

Opportunity #2: This $160 Million Chinese Education Provider Is Set to Explode

Most people typically associate things like pharmaceutical, home building and even technology companies as investment opportunities. But if someone were to tell you, “There’s a real opportunity to make big money on Chinese education,” you’d probably say they’re crazy. Well, call me crazy…

China has made it a point of pride at how fast its population is becoming educated. From the land of a long agricultural past, it’s pretty obvious that more and more Chinese are moving to the cities to work in white-collar jobs. Well, those jobs aren’t just handed to ex-farmers. They must pass through a bit of education first. And educated, they are…

For instance, the number of students in China, who are enrolled in a regular institution of higher education, has risen from only 850,000 in 1978 to 13,335,000 in 2004, when the last number was published.

With more and more people moving to the cities in China, we expect to see that number skyrocket. The schools are trying to keep up on all the new students but are failing. So one little small-cap company, ChinaEdu Corporation (NASDAQ: CEDU), is starting to make huge strides.

This little educational services provider offers full online degree programs for various majors. It also offers many services for both schools (from pre-primary to colleges) and students. The company has exclusive long-term contracts with many schools. This secures its revenue stream for years to come.

Keep on eye on these two as 2008 goes on. We certainly will here at Penny Sleuth. Until next time…

Sincerely,

Jim Nelson
January 7, 2008

P.S.: Fellow Sleuth editor Greg Guenthner recently put together his “Best Picks for 2008” Report for his Penny Stock Fortunes readers. And I have to tell you, all four have the potential to outperform the rest of the market, hands down. But don’t take my word for it.

Jim Nelson

Jim Nelson is the managing editor of Penny Sleuth. He has been playing the stock market since he was 14, always with a preference toward smaller companies. He has honed his stock picking skills at Agora Financial since 2004, effectively combining a growth and value approach. Like Greg Guenthner, Jim also contributes to Penny Stock Fortunes on top of bringing you the Penny Sleuth every weekday.

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