The Ultimate “Backdoor” Play on Asian Growth…

I recently wrote about a new divide that separates the world.

On one side of this divide you have countries that rely for their survival on imports of natural resources. On the other you have countries that rake in massive profits from natural resource exports.

You don’t need to know the first thing about investing to know which countries are going to profit in an increasingly resource constrained world: the “Haves” or the “Have-Nots.”

It’s a no-brainer.

On Wednesday, I talked about my two favorite “haves” in the emerging world: Brazil and Russia. Today, I want to draw your attention to another “have” – one much closer to home.

This country was the largest supplier of lumber to Japan last year, providing the Japanese with 38% of their total softwood-lumber imports. It also exports more oil to the U.S. than any other country on Earth. And India’s 600 million farmers rely on this country’s potash imports to grow their food.

For some of you, this country isn’t a foreign market at all. It’s where you live. I’m talking about Canada.

Leaving aside Canada’s natural resource riches, there are three key factors supporting the Canadian economy:

  1. A monetary policy that has not relied on excessive money printing
  2. A pro-business federal government
  3. A national balance sheet that is about the strongest in the industrialized world

But these factors are only a small part of the story. The No. 1 reason to love Canada is that it is a vast country blessed with abundant timber, water, coal, oil, natural gas, iron, gold and productive farmland.

Even better, there are only 35 million Canadians. So they have an abundance of these resources beyond their own needs. This means they can afford to export to countries that are hungry for them – particularly in Asia.

So how do you play Canada’s boom? We’ve already recommended you consider buying into Canada’s burgeoning oil sands industry through Suncor Energy Inc. (NYSE:SU).

With so much geopolitical risk in North Africa and the Middle East, Canada’s tar sands represent the biggest safe source of oil in the world right now.

It is highly unlikely that Canadians are going to rise up against their government. Or that sectarian strife is going to boil over there. Canada may have a reputation for being boring (underserved, I’m sure). But boring is a big plus when it comes to choosing an investment destination for your money.

Another way to play Canada’s resource strength is to buy shares in Teck Resources Ltd. (NYSE:TCK). Teck is a major producer of coal, copper and other metals that has China’s sovereign wealth fund, China Investment Corp., as a 17% strategic shareholder.

It’s solid, in other words. And it stands to benefit from increasing natural resource demand in the emerging world.

I’d add to this list fertilizer giant Potash Corp Saskatchewan (NYSE:POT).

Potash is a crop-enhancing fertilizer that the world couldn’t live without. It’s especially important in resource-poor emerging markets such as India, where about 60% of the population is dependent on farming for its livelihood.

It’s no surprise that India is the world’s biggest Potash importer. Potash boosts yields of popular crops such as rice, fruit and vegetables. Without a consistent supply, yields would fall and prices would rise.

In a country that is already suffering from high levels of food inflation, such a scenario would be catastrophic.

Potash Corp. is uniquely suited to ride this trend. About 80% of the world’s potash supply is controlled by a handful of companies. And Potash Corp. is the largest.

Increasing demand for mineral-rich fertilizer is the kind of trend set to pay off big, as populations grow in the emerging markets… per-capita incomes rise…and more and more people leave the countryside and move to cities.

You need to have patience to see this kind of investment pay off. But as they say, good things come to those who wait.