5-Star Stocks Poised to Pop: ShengdaTech

Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese chemical maker ShengdaTech (Nasdaq: SDTH  ) has earned a coveted five-star ranking.

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

ShengdaTech facts

Headquarters (Founded)	Tai'an City, China (2005)
Market Cap	$372 million
Industry	Diversified chemicals
Trailing-12-Month Revenue	$128 million
Management	Chairman/CEO Xiangzhi Chen CFO Andrew Chen
Return on Equity (Average, Past 3 Years)	33.2%
Cash/Debt	$111 million/$76 million
Other Highly Rated Chemical Stocks	Dow Chemical (NYSE: DOW  ) DuPont (NYSE: DD  ) Air Products & Chemicals (NYSE: APD  )
CAPS Members Bullish on SDTH Also Bullish on	Vale (NYSE: VALE  ) General Electric (NYSE: GE  )
CAPS Members Bearish on SDTH Also Bearish on	Sohu.com (Nasdaq: SOHU  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 99% of the 1,345 members who have rated ShengdaTech believe the stock will outperform the S&P 500 going forward. These bulls include Viking70 and "All-Star" pick complier AllStarPortfolio, who is ranked in the top 10% of our community.

Late last month, Viking70 boiled the ShengdaTech bull case down to a few simple words: "Should recover along with the world economy. Good fundamentals -- value play."

In a pitch from one week earlier, AllStarPortfolio (using a pick and pitch from caidencollett07) applauded management's recent move to cut the fat. Here's an excerpt:

They no longer manufacture coal-based chemicals, including ammonium bicarbonate, liquid ammonia, methanol and melamine due to rezoning issues. The nano precipitated calcium carbonate [NPCC] is now their only business; they have ridden themselves of the lower margin coal-based business. This is what has the stock running under the radar. ...

Nano precipitated calcium carbonate is an additive that makes products such as paper, asphalt, and tires stronger and more cost efficient. The company's R&D efforts are also opening more doors for the company. China's growth of the middle class ensures that there will be more roads and tires, which should greatly benefit ShengdaTech. I also believe they should return to earnings growth in the future.

What do you think about ShengdaTech, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!