Wall Street's Buy List

"Actions speak louder than words." There's more than a grain of truth to the old chestnut, I'll warrant. But why does the media focus so much attention on what Wall Street says about companies? After all, upgrades and downgrades are mere words; what really matters is how the big boys act.

Luckily for Wall Street watchers, the Internet has made it easy to find this out. All we need do is read MSN Money's list of which companies the institutions are buying. Of course, "monkey see, monkey do" may not make for the soundest of investment strategies. So even as we view the professionals' words with skepticism, we might want to think twice before blindly imitating their actions.

All the same, there are times when Wall Street is buying and the smartest investors on Main Street agree. At Motley Fool CAPS, we track the opinions of more than 72,000 lay and professional analysts, then overweight the most successful raters' opinions, arriving at a "CAPS rating" of from one to five stars (five being the best). When opinions on Wall Street and Main Street intersect, that just might be the time to do some buying.

Here then is the latest list version of Wall Street's Buy List, along with a summary of how CAPS investors view the companies:

Currently Fetching

CAPS Rating

GlobalSCAPE  (AMEX:GSB)

$7.08

*****

Anooraq Resources  (AMEX:ANO)

$5.29

****

Hansen Medical (NASDAQ:HNSN)

$37.50

****

General Steel  (AMEX:GSI)

$12.60

**

Transmeta  (NASDAQ:TMTA)

$13.41

**

Private Media Group  (NASDAQ:PRVT)

$3.42

*

Raining Data  (NASDAQ:RDTA)

$6.00

Not rated

Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money on the Saturday following close of trading last week. Current pricing provided by MSN Money on the same date. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Wall Street's Buy List is all over the map this week. Main Streeters just shake their heads in disbelief at some of the professionals' picks: General Steel, Transmeta, and Private Media -- what were they thinking? And Raining Data? I don't think I've ever even heard of that company. Not a single CAPS player has penned a pitch either for or against it.

At the same time, we've got Wall Street buying the same Hansen stock it was selling just four months ago; Anooraq demonstrating the continued popularity of platinum; and what's this? An AMEX-listed stock at the top of the list? Now that's interesting.

Here we have a tiny purveyor of "file management software for individuals and business users to send data over the Internet, and wide-area file system collaboration and continuous data protection products." To be honest, I haven't a clue what any of that means (if you do understand it, be so kind as to drop by CAPS and provide a translation). What I do understand is that with 43 outperform ratings on the stock, and not a single underperform rating, Main Street investors agree wholeheartedly with Wall Street that this stock is a buy. Let's find out why.

The bull case for GlobalSCAPE

  • AW2580 calls GlobalSCAPE a company with: "great growth outlook and zero debt. It will continue to grow as secure means of [communications] remain important to businesses."
  • Just how great is GlobalSCAPE's growth? According to coachmax: "This company [has grown] its revenues over 162% over the past year. All the lights are turning green."
  • ria12 argues, "At the current earnings of 30 cents and high double digit growth rate, this is a winner."

Like coachmax said, GlobalSCAPE posted 162% revenue growth last quarter. More impressive still, net profit increased 323%, and according to Yahoo! Finance, the company has nearly doubled its annual profits every year for the past five years. Yowza! I don't even need to tell you that this firm is generating free cash flow far in excess of its GAAP profits to bolster the case that it's cheap. Annual profit growth of 95% makes even GlobalSCAPE's high P/E of 35 look cheap -- if it can maintain the growth.

Time to chime in
Not fully (read: "not even remotely") understanding what GlobalSCAPE does, I'm in no position to opine on the chances that this firm can maintain its historical growth rate for any length of time. But that's where you, the CAPS player and Fool reader, come in. Click on over to CAPS and tell us your thoughts about GlobalSCAPE now.

And while you're at it, throw in a pitch for or against this unknown company Raining Data. Let's see if we can get it a "star" rating of its own.


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