After spending much of the past six months at a mediocre three-star rank, Telestone Technologies (Nasdaq: TSTC) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to climb all the way up to four stars. A total of 269 members have given their opinion on the wireless network solutions provider, with many of them offering analysis explaining the recent optimism.

With demand for Telestone's equipment and services on the rise and its valuation recently becoming more favorable as the stock is down more than 50% year to date, many CAPS members are taking a renewed look at the stock. The company reported a 41% jump in first-quarter revenue and expects the strength to continue as Chinese telecom heavyweights spend cash to improve their wireless networks and capture more subscribers. Although China Unicom (NYSE: CHU) and China Mobile (NYSE: CHL) each added around 1 million 3G subscribers in May alone, the total number of 3G customers recently topped just 20 million among the three main providers -- China Unicom, China Mobile, and China Telecom (NYSE: CHA). This is just a fraction of the nearly 800 million total wireless subscribers in China though, so Telestone looks for the companies to continue to strengthen their 3G networks and eventually drive growth in 4G to aggressively go after the large potential market. 

The growing Chinese market is expected to help a number of players -- telecom equipment maker Alcatel-Lucent (NYSE: ALU) expects to return to revenue growth this year thanks in part to China and Telestone's competitor Powerwave Technologies (Nasdaq: PWAV) has been seeing a greater percentage of its revenue come from the Asia Pacific region, with the area making up about 40% of its total first-quarter revenues. And other U.S.-based companies like Qualcomm (Nasdaq: QCOM) are working hard to realize the potential there as well, as China Mobile has been testing Qualcomm's technology for possible use in next-generation 4G networks.

With the backdrop of heavy spending in the region, Telestone recently raised its full-year revenue guidance and now looks for 80% year over year revenue growth. With improving demand in its favor, many CAPS members see tremendous potential in the small cap.

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