5-Star Stocks Poised to Pop: American Oriental Bioengineering

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Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, traditional-Chinese medicine provider American Oriental Bioengineering (NYSE: AOB) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at AOB's business, and see what CAPS investors are saying about the stock right now.

AOB facts

Headquarters	Shenzhen, China (1970)
Market Cap	$397.5 million
Industry	Biotechnology
TTM Revenue	$198.6 million
Management	CEO Shujun Liu Co-Founder/CFO Yanchun Li
Return on Equity (average last three years)	21.4%
Competitors	Cheung Kong Life Science, Harbin Pharmaceutical
CAPS members bullish on AOB also bullish on	Apple (Nasdaq: AAPL), Hurco (Nasdaq: HURC), Middleby (Nasdaq: MIDD)
CAPS members bearish on AOB also bearish on	Baidu.com (Nasdaq: BIDU), First Solar (Nasdaq: FSLR), InterOil (AMEX: IOC)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, some 93% of the 294 All-Star members who have rated AOB believe the stock will outperform the S&P 500 going forward. These All-Star bulls include fellow Fool Rich Smith (TMFDitty) and jinchoice, both of whom are ranked in the top 5% of our community.

In August, Rich brought some attention to the bargain:

Cheap PEG ratio, and FCF is starting to outstrip net income. ... The company seems to require minimal capex to grow, and its stock dilution is not too unreasonable at 5% over the past year. Looks like a safe bet.

A more recent pitch from jinchoice two weeks ago shares that bullish sentiment, highlighting AOB's strong competitive position:

Having lived in Korea, I'm familiar with the way Asians view their traditional medicine. With their increased wealth, the Chinese will ever be more health conscious, and they will start spending their money on traditional medicines that benefit their overall health even when there is no ailment. AOB is the biggest player in a very fragmented market. They will grow through acquisitions, and in time, I hope that their brand will be recognized in China. The Chinese will associate brand names with safety, and that should give AOB a great edge in the market.

What do you think about AOB, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.