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Trade: Zweigish indicators for American Oriental Bioengineering (AOB)

By SumOfSome | March 18, 2007

After each screen, we are going to select one stock which sticks out based on various indicators.  This week’s selection is American Oriental Bioengineering (Ticker:AOB) at $9.30/share.

  Screen Recommendations: While our first screen did not return any Martin Zweig-like results, this week’s screen returned two, one of which also appears in the CAPS player picks screen, making it a member of the “Screen of Screens” as well.  Since each of these three screens are beating the S&P so far, this is a good starting point.

 Analyst Ratings:  Based on MSN’s analyst report and Briefing’s Analyst Upgrades/Downgrades, AOB is a StrongBuy/Buy.  Of course, it is important to note that there are few analysts tracking this stock.  It is a low volume stock, trading an average of only 1.3 million shares daily.  This typically means the stock is more volatile to events that effect the stock price.  And, confirming this, AOB shows a beta of 1.6, indicating it may be more risky than other stocks.

  Technical Indicators:  Based on various moving averages found at BarCharts, AOB is a sell.  To take on this risk, you would have to bet that AOB is approaching a bottom point.  Looking at support levels can help to establish this bottom.  Support levels on StockConsultant show various single support levels with moderate strength.  These support levels are good to see, but it would be better to see a double or triple support level. 

 Earnings Expectations:  AOB shows better earnings growth compared to the industry and sector average.  They also have a strong record of meeting their expectations.  While the technical indicators mentioned above may show some added risk, AOB also offers the corresponding added return should it continue to achieve current expectations.

On Sale:  As always, it is great to buy a stock after its taken a hit.  AOB is down 18% YTD, so it definitely qualifies.  Looking at the RSI, we see it is below 30, an indicator that it may be oversold.

I would classify this stock as a risky selection, however I would not select it if the potential upside was not in-line and I did not feel a measure of success.  In addition to bringing you picks based on each new Screen Post and indicators, we hope to begin other regular articles which will make selections based more on company profiles and market news.

Topics: AOB, Ticker, Trade, Trade Opinion | No Comments »