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 collects ratings from more than 60,000 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's 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:

Wall Street vs. Main Street
It looks like someone opened a fire hydrant on Main Street today. Not to sprinkle kids as they play in the summer sun, but to douse Wall Street's hottest picks with a cold dose of reality. More than half the stocks favored by Wall Street professionals this week receive average to below-average ratings on CAPS, and we've got just one likely outperformer in this bunch -- laboratory supply company Dade Behring.

Out of 45 CAPS players surveyed, 44 expect Dade Behring to outperform the S&P 500. Even more impressive, the vote among our All-Star investors is unanimous -- 15-to-0 in favor of Dade Behring. Want to know why they like this company so much? So do I. So let's find out:

The bull case for Dade Behring

• All-Star CAPS player extremeinvesting introduces us to the company: Dade Behring works in "the medical diagnostic industry ... engaging in the manufacture and distribution of diagnostics products and services to clinical laboratories worldwide. ... These products are used to detect and measure substances that may be found in patients' blood, urine, or tissue samples. Moreover, DADE knows how to utilize information technology to improve processes in conjunction with their core medical diagnostic industry, which has and will be booming in the years to come."
• Fellow All-Stars ColtHz and hermanmc are just as enthusiastic as their peer, if a bit more laconic in expressing their thoughts. ColtHz likes Dade Behring's "expanding business," and hermanmc observes "fundamentls [sic] getting better."

As enthusiastic as our All-Stars are, however, I'm afraid I must break with the pack on this one. Regarding the "expanding business" comment, I note that analysts predict this firm's profits will grow only 14% per year over the next five years. That's roughly the same growth rate projected for this industry as a whole, so I'm not sure how attractive an investment that makes Dade Behring. (I mean, why risk your money on a single stock, when you could just as easily diversify into a health-care ETF that's expected to grow just as fast?) Moreover, the firm's 46 trailing P/E looks a bit rich for a mere 14% growth.

If you really want to put your money in a single laboratory-type stock, I'd think the better bet is to pick a company that's already been thoroughly vetted by our Foolish analysts -- and trading at a P/E just half the size of Dade Behring's. As luck would have it, two of the leading diagnostic companies in this industry are official recommendations here -- LabCorp (NYSE:LH) at Motley Fool Stock Advisor, and Quest Diagnostics (NYSE:DGX) at Motley Fool Inside Value. (Find out why we like them, and learn our recommended buy-in prices, when you take a free trial of either newsletter.)

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Wall Street's favorite stocks -- or even what our All-Stars are saying. We also want to hear what you know about the company. Is there something about Dade Behring that we're missing? If so, come on over to CAPS and clue us in.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

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 No. 759 out of more than 60,000 raters. The Fool has a disclosure policy.