Normally when investors think of stocks trading on the over-the-counter exchange, it’s only after reading the headline on some penny stock scam. Most OTC-traded companies are thinly-traded and offer very limited financial information available to shareholders.

For this reason, most OTC stocks are not normally covered by analysts, and are usually completely ignored by regular investors.

That can mean outsized gains for investors that are willing to dig deeper into financials to uncover the companies that are more than just a postal address for a pump-and-dump scheme.

Screening through OTC stocks recently, I found one company that could be the furthest from what you would normally expect on the market. It’s building a consumer internet empire, and is already the largest company in Asia.

In fact, it’s bigger than Facebook (Nasdaq: FB).

#-ad_banner-#

Building A Consumer Internet Empire

China internet usage jumped to 668 million users last year, posting growth of 5.7% from the prior year, but still only bringing the percentage of connected users to 49% of the population. Considering  that internet usage by people between the ages of 10 and 40 is above 75%, the country could see outsized growth for decades as the entire population comes online.

Compare this to the meager 1.1% growth in U.S. internet users, a market that added just 3.2 million users over the past year, and you get an idea of scale in the Chinese online audience.

None of the major U.S. consumer retail and internet companies have been able to make progress in the Chinese market. Facebook has been banned since 2009, and the government shut down several of Apple’s (Nasadaq:AAPL) services in February. Google (Nasdaq: GOOGL) shut down its own services in 2010, though CEO Eric Schmidt made a trip this year in order to thaw relations with the government.

One Chinese company is using its influence as a domestic name to corner the future of all things internet. In fact, it is now the largest private company in all of Asia, and one of the ten largest in the world.

The company has ADR shares available, but because it trades on the OTC market, few investors know much about it.

Tencent Holdings (OTC: TCEHY) is the largest company in Asia, with a market cap of $246 billion and ADR shares that equal one common share in Hong Kong. The company is making strategic investments in all sectors of the consumer internet, with key holdings in social media, online gaming, mobile payments and ecommerce.

The company owns the largest messaging App in China (WeChat), the largest mobile browser by monthly active users (QQ), the largest music streaming platform, the largest mobile security manager (WeSecure) and the second largest payment platform in the country.

Monthly Active Users (MAU) on QQ, Weixin, QZone and WeChat alone total 2.36 billion users, and this number has grown 12% over the year through Q2 2016. That’s larger than Facebook’s 1.7 billion users, and doesn’t include gaming users or other platforms.

The company books diversified revenue across social networks (26%), online games (53%), online advertising (15%), ecommerce transactions and other sources (7%). The operating margin of 42% is higher than both Facebook (39%) and Google (26%).

U.S. content producers are running to Tencent for partnership deals in video, gaming and music. The company has signed exclusive licensing agreements with the NBA, HBO and Warner Bros. to deliver content across its distribution network.

Revenue has grown at a compound annual rate of 39% over the five years through 2015 to $15.4 billion. Tencent produced $7.0 billion in free cash flow over the last year, and is sitting on $3.6 billion in net balance sheet cash.

Capital expenditures have come down from 32% of operating cash flow in 2011, to just 18% over the last twelve months. The company is still acquiring platforms and growth but looks like it is coming to a stage where it will focus on folding in its different holdings, producing a mountain of cash flow and reducing expenses.

While Tencent generally allows individual companies a degree of autonomy, the benefits to cooperation among holdings could be ground-breaking. With large U.S. rivals all but locked out of the market, Tencent has a long runway for growth and could see revenue increase even faster as it uses holdings to support each other.

Shares trade for 40.6 times trailing earnings, equal to the multiple on Facebook, with earnings growth of 35% last year, edging out the 32% growth at Facebook. While that may seem like fairly even stats, consider Tencent’s user base has a lot more room to expand, while Facebook and other competitors will have to manage growth outside of China.

That long road of growth in just the Chinese market takes the shares well beyond my $33 price target over the next year on $0.83 per share earnings. Besides the potential for growth in its domestic market, Tencent has the potential to book even stronger growth if it chooses to compete in developed markets like the United States.

Risks To Consider: Competition could increase in China if Facebook and other internet competitors are allowed access or if other competitors develop.

Action To Take: Take a long position in shares of Tencent for one of the most diversified holdings of consumer internet companies and a dominant position in China.

Editor’s Note: The right thinks Democrats will sink this country’s economy. The left thinks Republicans will bring economic destruction. Truth is: They’re both right. It doesn’t matter who takes office in January, because history says the market could drop up to 58%. But these three investments are a shoo-in for double and triple-digit returns no matter what happens.