Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese oil producer China North East Petroleum (AMEX: NEP) has earned a respected four-star ranking.

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

China North East facts

Headquarters (Founded) Song Yuan City, China (1999)
Market Cap $172.9 million
Industry Oil and gas exploration and production
Trailing-12-Month Revenue $106.6 million
Management

Acting CFO Shaohui Chen

VP Production/Operations Li Guo Yu
Return on Capital (Average, Past 3 Years) 30.9%
Cash/Debt $50.5 million / $2.75 million
Competitors

Ivanhoe Energy (Nasdaq: IVAN)

Ultra Petroleum (NYSE: UPL)

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

On CAPS, 97% of the 542 members who have rated China North East believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars tdomalley and mrindependent, both of whom are ranked in the top 2% of our community.

Just last month, tdomalley tapped China North East as a bargain opportunity:

Small cap oil company that has had its stock price beaten down by questionable accounting tactics. Appears to have straightened that out, so am willing to take a chance now based on nation's huge appetite for fuel. Still a long-term play.

China North East is down roughly 40% over the past year, but with an exclusive 20-year lease on its largest producing oilfield from PetroChina (NYSE: PTR) and a deal in which all of its oil is sold to the energy giant, many Fools think it's just too cheap to ignore. Currently, China North East trades at a price-to-cash flow multiple of 5.4, which is a discount to competitor Ultra Petroleum (9.3), as well as gorilla oil plays like ExxonMobil (NYSE: XOM) (8.5) and Chevron (NYSE: CVX) (6.2).

CAPS All-Star mrindependent elaborates on the bull case:

This stock is still reeling from the restatement of its 2008 financial results, which occurred several months ago. I think the financials are basically in line and this company appears to be positioned for massive success as a favored driller for Petrochina. Simple business model, focused management. Will be a multi-bagger unless fraud runs deep. I am putting real money on this.

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