Sociedad Quimica Minera de Chile (SQM – NYSE)

Dear Bottarelli Research Member,

The way I see it, the most predominant investment themes that’ll carry over into 2009 are as follows: Inflation, increasing demand for food across the globe, infrastructure buildouts on every continent, global power generation, and higher U.S. taxes.

Over the last few months, we’ve been getting positioned in the top small-cap companies that’ll capitalize on each of these emerging trends. But in addition to this list, there is one additional 2009 trend that you might not be aware of — a major shift among the “wealthy” and the “under 40” demographic that is moving away from the U.S. borders.

You may be shocked to hear this, but it’s happening before our eyes. After all, the risk of higher U.S. taxes is enough to make anyone look for a new place to live. And for those who are seriously looking, they’re finding a number of countries that offer lower taxes and much better health care — all at a very minimal cost. At the same time, these countries also have growing economies, plenty of jobs, and a stronger currency. Combine all of these elements, and you get a tremendous advantage over what is currently being offered here in the U.S.

Now, I’m not saying anyone moving outside of the U.S. will give up their citizenship. What they are doing, however, is using the advantages of other countries to better the quality of life for their families. Mark my words — the trend is in motion and it’s going to be a powerful transition moving into 2009.

Please don’t get me wrong: I love our great country and I would die on her very soil to protect her. But at the same time, I also feel it’s time we start positioning ourselves to profit off this transitional geographic shift. After all, it’s not hard to recognize that our country’s leaders are bailing out banks (and other large conglomerates) and passing the exorbitant bill on to red-blooded taxpayers like you and me. It’s just not right. No wonder people are leaving! I can’t really blame them.

As a result, hot spots like Brazil, Panama, Belize, Chile, Argentina, Peru, Columbia, and Nicaragua are not only home to many ex-Patriots, but they’re also home to many Europeans as well. I’m telling you, the trend is huge and it is gaining strength everyday. So today, we’re going to capitalize on a company that is geared towards huge population growth in South America.

I have personally spoken to some colleagues that have moved there, and they all report a better quality of life, lower taxes, top-notch medical facilities, and the best health care in the world. Not only that, but their property is increasing in value (while our property is falling month after month). As these geographic areas continue to grow in wealth and popularity, we’ll move into a company that is unknown to the mainstream investing population. I’ll bet that you’ve never even heard of them, but that’ll change very, very soon. You see, this company is based out of Chile, and they’re the world’s largest producer of lithium. They’re also a leader in specialty plant nutrition, iodine, and industrial chemicals. As you’ll see, these chemicals are integrated into products that you use every single day of your life — and demand is going gangbusters.

For example…

• Their proprietary technology for plant feeding is used for higher crop yields, which all farmers need to be profitable.
• Lithium is used in items like steel, batteries, pharmaceuticals, and air conditioning chemicals (to name a few).
• Iodine is used in x-rays, biocides, antiseptics, disinfectants, polarizing films for liquid crystal displays (LCD), chemicals, and herbicides.

Now comes the part you want to hear about…

This company just reported earnings of $190.5 million for the first half of 2008, an increase of 102.8% over the same period of 2007. Operating income reached $242.3 million, 83.2% higher than he first six months of 2007. And revenues for the first half of 2008 totaled $787.1 million, a 40.9% increase over the first half of 2007.

These are amazing numbers, which clearly set the table for powerful growth for years to come. Plus, they also sell products to the U.S., Europe, and Asia. But for whatever reason, this stock is off Wall Street’s radar. So while everyone else has their heads turned the other way, the time to strike is now!

The company is called Sociedad Quimica Minera de Chile (SQM – NYSE), and I’m confident they’ll be a fantastic addition to our small-cap portfolio.

SQM is in control of the biggest iodine and nitrate natural reserve in the world. They also control the highest lithium and potassium concentrations currently recorded. The “soft commodity super-cycle” is far from over, and SQM controls a niche-segment that’s about to kick into hyper-drive. Let’s cheerfully buy anywhere under $41.00.

UPDATES

Dendreon Corporation (DNDN – NASDAQ): They have initiated the second of two new Phase II trials of Provenge. This is on top of the Phase III trial that’s due out in October. Like we mentioned, this could offer us a dynamic return in no time. Volume is picking up and the stock price seems pretty resilient right now. So let’s be on our toes as we get closer to the new findings to be released. Speculative Buy.

Evergreen Solar (ESLR – NASDAQ): ESLR’s $170 million solar panel manufacturing plant in Devens, Massachusetts was the largest solar manufacturing project in the entire quarter. If you have yet to buy ESLR, I highly suggest adding shares to your ledger now. As the year end rolls in, I fully expect ESLR to show the same kind of returns we enjoyed with CSIQ, JASO, SOLF, and STP. Buy.

Nacel Energy Corporation (NCEN.OB): There’s no sense beating around the bush. NCEL has gotten slammed with selling, mostly over nervous investors worried about the politics involved in getting the green light to move ahead on their wind energy project (which, as reported in past bulletins, is now being disputed among local municipalities). On a brighter note, many states are now offering wind power grants to stimulate alternative energy projects, so let’s hold NCEN and await the outcome in September. Hold.

International Coal Group (ICO – NYSE): ICO has served us well. We already took a 50% profit on our first round, and then we added a new position when it pulled back to our original buy price. The current chart is gearing up for a new run coming our way soon, and I believe IOC will be a performance leader in the months that follow. Hold

Genoil (GNOLF.OB): This tiny company is executing the exact game plan that CEO David Lifschultz and I spoke about during our lengthy conversation a few months back. Genoil announced that it has signed a revised Letter Of Intent with Haiyitong, Inc. for their hydro-conversion upgrading project in China. All Genoil has to do is complete the financing for their part of the J/V. I personally have no doubt Mr. Lifschultz will get it done. I know we are down from our original buy alert, but their new contracts should positively affect the share price. Hold.

Syntroleum Corporation (SYNM – NASDAQ): Our small-cap play on synthetic fuels has been given the final approval to move forward with their renewable synthetic fuel facility. In a joint venture with chicken producer Tyson Foods, the two companies (who are calling their J/V arrangement “Dynamic Fuels LLC”) plan to turn low-grade inedible fats and greases into renewable transportation fuels for the military and civilian markets. Once operational, the plant is expected to produce 75 million gallons of renewable synthetic fuel a year. As we get closer to the elections, a run on all of these alternative fuel companies should take place. Let’s sit tight. Hold.

Gran Tierra Energy (GTE – AMEX): They just reported a very large discovery in the Rio Magdalena Block in central Colombia, yielding a combined rate of 8.5 million cubic feet of gas per day and 236 barrels of oil per day. As we have been telling you all along, this is a company you “must own.” It’s already given us over 140% profits on our first go round, and it’s going to happen again. Buy.

Ivanhoe Mines (IVN – NYSE): Not long ago, I mentioned that IVN and Entree Gold combined forces. Well, these two just announced they have found more coal 60 kilometers northwest of IVN’s Oyu Tolgoi copper-gold deposits. I urge you to make sure you also own some IVN. As this news hits, shares could once again take off. Buy.

We’ll have another great addition to our small-cap ledger next week. But until then, have a good weekend, and be sure to give thanks for the abundance in you life.

Sincerely,

The 1,000% Return You’ve Never Heard Of

Getting Ahead of the 2009 Lithium Bull Market

We’ll start off today’s small-cap alert by looking at some of the top stock performers with market caps between $200 million and $2 billion.

Starting in July of 2003 and going into the present day, one name you’d expect to see on a “top performers” list is Blackberry maker Research In Motion (RIMM – NASDAQ).During this timeframe, RIMM logged a powerful 3,116% return.

Another strong performer is global engineering and construction company McDermott International (MDR – NYSE), logging an equally-impressive 2,481% return.

But here’s the interesting part: Also included on this list is today’s pick, Chemical & Mining of Chile (SQM – NYSE).Using the same timeframe, SQM has gained an equally respectable 1,165%. And unlike RIMM and MDR, I would guess that 99 out of 100 investors have never even heard of SQM.

This “unknown factor” is one powerful aspect of today’s opportunity.

The other powerful aspect of today’s pick is the booming sector that SQM is engaged in. You see, SQM is a mineral mining and distribution company with ties to fertilizer, pharmaceuticals, and energy. This, by itself, is a super-powerful combination. But since they’re also the world’s largest producer of lithium, it’s easy to argue that SQM has one of the top product pipelines of any other company in the world. In fact, investing in lithium today could be like investing in potash five years ago. No wonder Potash of Saskatchewan (POT – NYSE), the #1 producer of potash in the world, currently has a 32% investment interest in SQM!

Lithium production has greatly increased since the end of World War II, fueled by commercial applications that include heat-resistant glass, ceramics, and lithium batteries. Lithium also has important links to nuclear physics. After all, splitting lithium atoms created the first man-made form of a nuclear reaction.

Chile and Argentina are the two leading lithium producers in the world, and strangely enough, most investors have not caught onto the major demand increase that lithium will experience over the next five years.

Think about this: As cars transition to plug-in electric hybrids powered by lithium-ion batteries, SQM will be in prime position to capitalize on this trend. That’s when investors will rush into SQM, pushing prices aggressively higher. Buying today positions you well ahead of the herd.

Looking specifically at SQM’s product line, they offer four (4) groupings:

1. Specialty Plant Nutrition (SPN)
2. Iodine
3. Lithium
4. Industrial Chemicals.

Each group is broken down below:

SPECIALTY PLANT NUTRITION PRODUCTS

Ultrasol: The only water-soluble product range powered by The Element Q, which is a new and exclusive warranty seal of SQM’s business formula that boosts crop yield and optimizes profitability.

Qrop: A complete line of nutrition solutions specially designed for soil application which address the most specific crop and soil needs, allowing farmers to obtain maximum yield and the best crop quality.

Speedfol: A special active element that biostimulates crops from their leaves, guaranteeing an unbeatable crop quality.

IODINE

Since SQM controls the world’s largest economically exploitable reserves in northern Chile, iodine is a core business for SQM. Iodine is used in a wide range of medical and industrial applications such as antiseptics, disinfectants, pharmaceutical intermediates, polarizing films for liquid crystal displays (LCD), and chemicals.

LITHIUM PRODUCTS

Lithium Carbonate: Used in a variety of applications, including batteries, ceramic, enamel, heat resistant glass, air conditioning chemicals, pharmaceuticals, and lithium derivatives.

Lithium Hydroxide: Used as a raw material in the lubricating grease industry, as well as in the dyes and battery industries.

Lithium Metal: Used as a catalyst in the pharmaceutical and chemical industries and finds application in the production of aluminum-lithium alloys.

INDUSTRIAL CHEMICAL PRODUCTS

Sodium Nitrate: Used in the production of glass, ceramics, explosives, and various chemical processes and metal treatments.

Potassium Nitrate: Used in metal treatment, fireworks, and gun powder.

Boric Acid: A by-product of the production of potassium sulfate, which is mainly used in the glass, ceramics, fiberglass, enamels, and as a raw material in the fabrication of screens for LCDs.

Now I admit, this list of product applications doesn’t sound too exiting. But as Mark mentioned above, demand for SQM’s products are off the charts. For example, SQM’s earnings report from August 12^th logged a 102.8% year-over-year increase, setting the stage for powerful upside growth in months ahead.

With a market cap of $10.42 billion, a Price/Sales ration of 7.12, and a 52-week change of 152% (compared to the S&P 500’s -11.23% loss), the stage looks set for an extended upside move. If the stock can break above the 50-day moving average, we could very easily see an extended upside run that re-tests the June highs of $60.00.

Quarterly revenue growth of 43.30% demands investor attention, and when SQM gets some national headlines, you’ll be glad you entered the stock today.

On that note, let’s add SQM to our small-cap ledger now.

PLAY: Buy shares of Sociedad Quimica Minera de Chile (SQM – NYSE) at or under $41.00, good for the week.

Sincerely,