In the state of Nevada, there's a company called Wonder Auto Technology. At first glance, you won't find anything too remarkable about Wonder Auto's business...

The company primarily makes money selling auto parts like starters and alternators, used in various types of cars, pick-ups, and SUVs. The company also makes parts for General Motors, Kia, Hyundai, Mitsubishi, and Daimler Chrysler, to name a few.

You can buy shares of Wonder Auto on the U.S. stock market under they symbol WATG. They've shot up more than 600% in just the past two years.

Here's the thing... If you live in Nevada, and you need a new starter or alternator... you can forget taking your car to Wonder Auto to get it fixed.

Why?

The company doesn't have a single building here in the United States. Wonder Auto Technology does all of its work, and makes all of its profits, in China. It's a China-founded, and China-based business.

Wonder Auto is an example of a type of investment I call "Chimerica" stocks.

Chimerica stocks are Chinese companies. They do business in China, with Chinese management, Chinese employees, and Chinese currency. They make products for Chinese consumers.

Take China 3C for example. It's the Chinese equivalent of Best Buy. China 3C sells consumer electronics from more than 600 stores in Eastern China. Or take Origin Agritech. It's China's equivalent of Monsanto. It produces genetically altered crop seeds like corn, cotton, canola, and rice. Both of these companies trade on stock exchanges in New York. China 3C's stock symbol is CHCG. Origin's stock symbol is SEED.

Chimerica stocks list in the U.S. because they can't list in China or Hong Kong. "Going public" in China takes about three years. But in America, it only takes about six months. According to Barron's, "Even now, for every company that goes public [in China] there are probably a hundred in the queue, and a lot of companies want money sooner rather than later."

A shell company is a stock without a business. The business has no assets or operations, but it still has a name and a stock symbol. To list in America, Chinese companies find an American shell company and back themselves in. Lawyers call this a "reverse merger."

Take United National Film Corporation. It stopped doing business in 2001 and became an empty shell. In 2007, United National Film Corporation "merged" with a company that makes turbines for Chinese power plants. Now this company's name is Wuhan General Group and it trades under the symbol WUHN.

Chimerica stocks are the best way to invest directly in China. According to Barron's, they sell for an average 10 times earnings. The price-to-earnings ratio of the Shanghai Composite – China's main stock exchange – is 27. Chimerica stocks are cheap because Chinese investors cannot open brokerage accounts in the United States to buy these stocks. American investors don't know about them. Analysts don't cover them.

Another bonus: Because Chimerica stocks list on American stock exchanges, they must report their results in English, follow standard American accounting regulations, and comply with SEC rules.

There are about 100 Chimerica stocks. They range in market cap from a few million to a few billion. There's no official record of Chimerica stocks, but I put together this list of the ones I know about.

I'm not ready to invest in China right now. The Chinese stock market is down 44% from its highs in October 2007 and is still in a downtrend. When the market turns around – which should happen later this year – I'll pick my China investments from this list...

Good investing,

Tom

Editor's note: Tom Dyson is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

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