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AOB is a babyboomers delight in my opinion.Yes, it has announced a move most recently that just brought the price down from a closing price of 7.20 on Jan.7,2009 TO 4.85 on 2/12/09..It had announced a purchase of a Beijing facility for a Convention Center in a most strategic center of growth.The real reason besides a training center to centralize management in Beijing is really a way to obtain government grants for AOB and secure low interest loans.Tony Liu,Chairman and CEO of the company has said this but only after a haircut in share price as critics jumped all over his words used as if it went from a growing and profitable pharmaceutical company and leaving that formula for holding convention centers.Last year,AOB annoyed investors by announcing it had bought a 550 million drug distribution company for 110 million.. It may have been a large company although not as profitable, especially as profitable as AOB’s drugs. When AOB announced a 30 million stock buyback program, the next day,it would be financed by a 115 million convertible note offering that further diluted shareholder’s value.This further dismayed investors last year.

Despite these moves that were not appealing critics,AOB remains a dynamic profitable company and is in its growing stages. The first 3 quarters of 2008, AOB increased revenue by 65% to 168 million. Net income which is a strong influence on how growth is occurring (minus any currency gains) was its real yardstick of growth.Net income for the company jumped 42% to 39.8 million.With the addition of a currency gain -that would make net income short of revenue by just 24%. AOB raised its forecast for 2008 revenues to 250 million.82 million is expected revenues for quarter 4 -that is a whopping jolly green giant jump for 4th quarter revenue which although 4th quarter’s earnings arent out yet–this would be definitely attributed to its cold and flu part of their business that would benefit during this seasonal upswing..AOB’s most recent real estate acquisitions will need to add a lot of value to over exceed or to emulate these type of net income growth..AOB produces over the counter drugs and prescription drugs..Its market cap is about 379 million..Its 12 month range is 4.05-12.28 share price.AOB PEG is about .30 and although we have had dilution of share price in the past as far as acquisitions, I feel with ballpark net incomes that have been growing at ballpark 50 %-the earnings per share growth is still roughly 20%.This is market beating -so management seems to me to know what they are doing and I believe their management has strong foresight.If their acquisitions are beating the market as far as the earnings per share growth on more money than less money,it would make since for a 379 million market cap to still acquire other companies.This company isnt like many depressed companies last year selling junk bonds and getting negative EPS growth.

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This company is oversold in my opinion.At this share price level of about 4.85 ,in my opinion its a strong buy..We are now in a market where fundamentals and good earnings reports (among a small percentage perhaps of all stocks in this economy) will matter and unlike from Sept ’08 to early Dec ’08 where all stocks were sold off regardless of fundamentals-as of lately-now fundamentals will count..Just look at DGX -another health care stock I like I might cover in a future blog..DGX was 46.58 on January 23-had good earnings on 1/26-jumped 4.59 in that one day range and has held par 2 1/2 weeks later. AOB from 2002 through 2007 achieved a top line compound annual growth rate of 66.6%, EPS grew from .15 in 2003 to .60 in 2007,a compounded annual growth rate of 42.7 %.The first nine months of 2008 grew both in bottom and top lines..At this share price hovering around 4.83, AOB in my opinion is a strong buy going straight into earnings for 4th quarter…

Mike currently owns shares of AOB but not DGX. Rob currently doesnt own any shares of AOB and DGX..However,Rob would possibly like to own either one of these stocks in the near future.Mike would possibly like to own DGX in the near future.Please do your own independent research before you make an investment purchase. See our disclaimer.

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