I came across an interesting article that talks about why AOB(5.63 -0.07 -1.23%, ) is a good growth stock from Forbes: Making Money On Chinese Medicine

Excerpt from the article that I found interestig:

With top line growth expected to exceed 50% in 2008, an earnings multiple of about 14 and favorable demographic trends, the stock offers great growth potential at a bargain basement price.

Products fall into two categories. Plant-based pharmaceuticals, which generated 82% of first-quarter sales, are medicinal compounds derived from the leaves and roots of plants. These products, approved by the Chinese State Food and Drug Administration, are used to treat various illnesses. They are sold over the counter and by prescription.

Plant-based nutraceuticals generated 18% of first-quarter sales. These are dietary supplements designed to prevent illness rather than treat it. PBNs are also believed to promote health and wellness. AOB sells tablets, powders and an instant coffee containing soy peptides. It also sells nutritional drinks derived from honey products, marine plants and natural herbs that are rich in amino acids and vitamins.

AOB has benefited from a general preference in China for TCMs over synthetically manufactured alternatives. Complementary acquisitions have also contributed to the company’s growth.

I bought some AOB(5.63 -0.07 -1.23%, ) at $8.50 this morning to lower my cost after yesterday’s big drop.

The bear is still bringing the market down. Fear is still strong. Experts fuel that by saying that the worst is yet to come and the high oil price is cutting down the profit margin of companies in the US.

Here’s what I anticipate for the stocks in my portfolio:

• CME(182.29 +9.69 +5.61%, ) has gone down significantly in the past couple of weeks. The downward trend might continue even more, but there’s no reason to get out of this position since the business is still very strong.
• MER(12.43 +0.87 +7.53%, ) will continue to slide. It might become more volatile as is earnings is approaching. The financial sector, especially the investment banks, will be troubled for a while.
• AOB(5.63 -0.07 -1.23%, ) has dropped significantly although there’s no news item that justify that decline. Today, it went down over 5% with volume twice as high as the average volume. There might be something that the big players know that we don’t. I’m not going to close the position because the fundamentals are still very strong and management has proven that they know how to increase the company’s value well in the past 6 years, but I won’t buy more until I know what’s going on.
• NTDOY(0.00 N/A N/A, ) went past 71. It will hover around 70 for a while. It should rise slowly.
• BAC(15.05 +1.00 +7.12%, ) will continue to decline.
• STLY(6.25 -0.05 -0.79%, ) will continue to fall. It went below 10 today. I expect it to hit 9 in the near future.
• UPS(56.73 +1.54 +2.79%, ) broke the 60 mark. It will keep going down since the oil price continue to rise and the economy is getting weaker.

In the long run, I still think both YHOO(11.50 0.00 0.00%, ) and TAN(7.72 +0.55 +7.67%, ) will go up, but the problem with of these is that they’re too unpredictable.

YHOO is too easily affected by rumors, while I don’t understand what’s going on with TAN (ETF for solar).

I didn’t plan on closing down those positions today, but AOB(5.63 -0.07 -1.23%, ) went down significantly (over 7%) because Cramer said “sell”. So why would I want to wait for YHOO and TAN to come back up in a bear market while I have a safer play in AOB?

In addition to a better financial condition, by owning more AOB, I have the opportunity to sell more call options.

The bear is getting stronger. These days, no bad news is a good news. Even bad news can be comforting if it’s not as bad as what people expected.

Here’s what I anticipate for the stocks in my portfolio:

• CME(182.29 +9.69 +5.61%, ) might not go up very far. It might even slide down more. Any price below 400 is a great great buying opportunity.
• MER(12.43 +0.87 +7.53%, ) will continue to slide. It might become more volatile as is earnings is approaching. The financial sector, especially the investment banks, will be troubled for a while.
• AOB(5.63 -0.07 -1.23%, ) will hover around 9-11. Depending on the market’s emotion, it might fall a little bit, but like CME, it will climb slowly but surely in the long run. Recent drop creates a buying opportunity. I will buy more if it falls to 9.50 without any significant change in its business. AOB is a good company to sell covered calls on, so you can make the incremental revenue as you wait for the stock to rise.
• NTDOY(0.00 N/A N/A, ) will be traded around 65-70, steadily rising.
• BAC(15.05 +1.00 +7.12%, ) might be volatile this week. Its closing its CFC acquisition tomorrow (07/01). In the next few months, I expect BAC to decline significantly.
• TAN(7.72 +0.55 +7.67%, ) will be traded around 25-29. This ETF is not going anywhere anytime soon, but as the cost for obtaining solar energy declines, this EFT will rise.
• STLY(6.25 -0.05 -0.79%, ) will slowly fall. I anticipate the trading range to be around 10 - 12. I’ll short more if it gets above 12.50
• YHOO(11.50 0.00 0.00%, ) is going to slide some more if there’s no news or rumor about what Icahn is doing or any acquisition talk.
• UPS(56.73 +1.54 +2.79%, ) might hover around 60, but in the next few months it will continue to fall.