Wall Street's Wish List

"Actions speak louder than words."

It's an old saying, with more than a grain of truth to it, I'll warrant. So why is it that when the Wall Street firms merely "initiate coverage" or "upgrade" their ratings on a company, that gets all the news coverage? After all, those are only words, when what really matters is how the big boys act. Luckily for Wall Street watchers, finding out which professionals put their money where their corporate mouthpieces are has become relatively easy in this Internet age of ours. All we have to do is read MSN Money's list of which companies the Street is most actively buying.

But once we've done that, what next? After all, "Monkey see, monkey do" may not make for the soundest of investment strategies. That's where Motley Fool CAPS can help. The Fool's newest venture into the realm of collective intelligence gathers ratings from more than 23,000 lay and professional analysts, then overweights the most successful raters' opinions to come up with a "CAPS rating" from one to five stars (five being the best). If Wall Street is buying and the smartest investors in Fooldom say they're right to do so, then that should get your attention.

And so, let's meet today's list of contenders:

Chickens and eggs
Another well-worn saw asks us: Which came first, the chicken or the egg? As you've noticed by now, one characteristic that each of these stocks has in common is that they've experienced dramatic price increases over the last 30 days. But are the Wall Streeters buying because the stocks have gone up -- playing the momentum game -- or is their heavy buying causing the prices to spike? It could even be a combination of the two, a vicious circle of some buyers pushing the price up, and others hopping aboard the bandwagon and enjoying the ride.

Can this chicken fly?
Choosing which of the above seven stocks to profile is easy this week, as only one -- the heroically titled American Superconductor -- has garnered both Wall Street enthusiasm and CAPS approval. As for the rest, three stocks get the grudging three-star rating (a gentleman investor's "C"), one falls below average, and two more haven't even attracted enough investor interest to merit a rating. (Speaking of which, if you're an investor in either Osteotech or Lesco and you think you can help us better understand the firms, then come on over to Motley Fool CAPS and tell us a little bit about them.)

But getting back to American Superconductor, we have considerable feedback amassed on this one already. Let's see what our very best investors -- the CAPS All-Stars -- are saying about this maker of high-temperature superconductor wires and power electronic converters:

• Laying out the basic investment thesis is 1675ama, who writes: "Their business couldn't be in a more appropriate area with the dire need to upgrade the U.S. power grid. Improved efficiency (and stability) in the transmission, distribution, and employment of electricity using high temperature super conducting materials and motors puts the company in the sweet spot of infrastructure spending."
• jroggow, while also optimistic, injects a note of realism into the debate, noting: "It's infeasible to think that all of our power lines will be replaced by [high temperature superconductor wires], but HTSC will likely have a place in urban trunk lines."
• deckdawg, an All-Star ranked in the top 10% of CAPS players, opines: "20 years of blood, sweat & tears to produce a revolutionary electrical product is finally coming to fruition. Diverse, multibillion market opportunities (military, electrical power transmission, ship propulsion, transportation). Has 20-bagger potential (over 10+ years)."

Now that you've heard the bull case, let me add a note of caution. deckdawg's "blood, sweat & tears" comment refers to American Superconductor's history of losing money in every year it's been in business, as far back as 1987. As for the "20-bagger potential," be aware that in its latest 10-K, the company warns investors: "We expect to continue to incur operating losses until at least the end of fiscal 2009 and there can be no assurance that we will ever achieve profitability." Just a word to the Foolish.

Speaking of words, now that you've heard what our players have to say, it's your turn to chime in. Will American Superconductor continue to function as a conduit for burning up shareholders' cash, or will its profits potential electrify the Street? If the latter, then do you see any better prospects for profit in today's list?

Our phone lines are open, and operators standing by. Call now and tell us what you think.

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Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 17 out of more than 23,000 raters. Palm is a Motley Fool Stock Advisor choice. The Fool's disclosure policy rocks the cape and tights.