When you have been an investor/trader as long as I have, you tend to create favorites. I have my favorites certainly, stocks like JDSU, LGDI, TASR and today’s blog topic: American Oriental Bioengeneering, Inc. (AOB).  I have been aware of AOB for years and have traded it/blogged it to great success.

In fact, it was one of the first stocks that I blogged on this site.  You can read my blog here. I was right about it then, as this chart would indicate.  AOB was profiled around $4.25 and soared to $5.70 in about a week.  I was right then….I wonder if I can be right again.

Headquartered in China and with most of its sales in China, AOB’s develops, manufactures and sells plant-based pharmaceuticals, nutraceuticals and food supplements. Its product are designed to treat a wide variety of ailments under a number of brand/trade names.

The company was founded in 2001 and has enjoyed a great run.   Upon reviewing the financials, I can see that AOB makes money! Every year for the last three years, they have posted a profit.  Sales and profits have slowed down somewhat this year, but AOB is on track to post another profit for 2009.  The balance sheet is strong with great debt coverage ratios.  Debt is high at $116MM (33% of equity), but the company’s cash balances and cash flow are sufficient to service the debt easily.

Here is a two-month chart that shows the recent trading action.

AOB is a great radar stock…..It has shown strong volatility in the past and looks to me like it might be ready for a bounce.  It will be instructive to see if it will hold above the current support level.  Any break below it and the stock should be avoided.

Good luck and good trading,

Jeffrey Dean

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