Wall Street's Buy List

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"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 to 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. Even as we view the professionals' words with skepticism, so, too, we might want to think twice before blindly imitating their actions.

And yet, 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 78,000-plus lay and professional analysts, then overweight the most successful raters' opinions, arriving at a "CAPS rating" 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 version of Wall Street's Buy List, along with a summary of how CAPS investors view the companies:

	Currently Fetching	CAPS Rating
Harbin Electric (Nasdaq: HRBN)	$24.35	****
Leap Wireless  (Nasdaq: LEAP)	$51.51	**
China  Sunergy  (Nasdaq: CSUN)	$10.86	**
PFF Bancorp  (NYSE: PFB)	$13.12	*
Pacific Ethanol	$8.92	*

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
Main Street investors look askance at Wall Street's top picks this week, giving the majority of stocks on the list below-average ratings. The sole exception is a familiar name: Harbin Electric.

It's been awhile since we last wrote about this one, but you remember Harbin, right? In February, the Chinese maker of electromagnetic "linear motors" for transport systems such as conveyor belts and escalators headlined this column with a five-star rating. Today, Harbin has lost a star -- but the stock has nearly doubled in value, as its stock soared from $12.40 to $24.35, while the overall market languished.

What's that? The stock's up 96% already, and CAPS investors still expect it to outperform the market? Apparently so. Let's find out why as we revisit ...

The bull case for Harbin Electric

• lybargerlaw introduced us to Harbin last time around. Given how well it's performed since, I think it's only proper we let lybargerlaw pitch it to us again: "[Harbin] has patented [a] revolutionary new type of electric motor: linear, with greatly reduced number of parts, much lower cost per unit of electricity generated and almost unlimited potential for use in all kinds of industrial settings. Co. has agreement with Chinese testing company to develop this new motor to run commuter train."
• balilight takes a more cautious view, warning: "It is difficult to assess the quality of Boards of Directors in China but this company reports steady growth in revenue and cash flow. A new factory, and a diversified marketplace for specialty micro motors gives me reason to believe HRBN is not a bubble stock and will continue to out perform in 2008."
• The company is also beginning to attract the interest of CAPS All-Stars. PootieMcHsu, for example, observes that Harbin has "Good ROE and PM. Could this be China version of [Emerson Electric (NYSE: EMR)]?"

Actually, Harbin could be even better than its U.S. counterparts. For example, Emerson boasts a 25% return on equity and 9% profit margin. Eaton (NYSE: ETN) produces 21% and 8%. Even granddaddy of electric power stocks General Electric (NYSE: GE), with its outsize 13% profit margin, gets "only" a 20% ROE. Harbin outclasses all three, boasting return on equity of 33% ... and a 33% profit margin to boot.

Time to chime in
Valuation-wise, Harbin sells for 22 times trailing earnings, which seems downright cheap for a firm that grew its revenue 88% last quarter and is expected to grow its profits by 50% next year.

But the aim of this column isn't just to tell you what I think about Harbin -- or even what other CAPS players are saying. We also want to hear your thoughts. Is Harbin the "real deal"? Come on over to CAPS and tell us what you think.

For every post you make to CAPS or any Foolish discussion board in the month of December, The Motley Fool will donate $0.02 to charity. So give us your two cents and we'll pay it forward!