Wall Street's Buy List

If actions speak louder than words, why do the media focus so much attention on what Wall Street says about companies, instead of what it does with them?

Luckily for Wall Street watchers, the Internet brings us MSN Money's list of which companies the institutions are buying. True, we should be as skeptical of Wall Street's actions as we are of its words. But when the 89,000-plus lay and professional investors on Motley Fool CAPS agree with Wall Street's opinions, it just might be time for some buying.

Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved.

Stock	Recently Fetching	CAPS Rating (5 Max):
Tenaris SA  (:TS)	$49.10	*****
Asyst Technologies (:ASYT)	$3.62	*
MEMSIC	$6.45	**
Cognex  (NASDAQ:CGNX)	$20.25	*
AMREP (NYSE:AXR)	$47.99	*

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

Wall Street vs. Main Street
Main Street takes one look at Wall Street's fave five this week and wonders aloud: "What are you people thinking?" With just a single exception, the CAPS community roundly pans every stock on Wall Street's buy list. But hold up a sec. Before dismissing the list in its entirety, suspend your judgment long enough to at least consider ...

The bull case for Tenaris SA

• Hardly a household name in the U.S., Tenaris has nonetheless become a favorite among CAPS' best investors. Today, we'll look at bullish arguments from three such All-Stars, beginning with a brief introduction to the company from November 2006, courtesy of ari21: "[International] company, [makes] pipelines and tubing [for] oil, gas, [automobile,] and industrial [companies] in Europe, Argentina, and [Brazil]." Our CAPS participant expects that Tenaris will get "fuel to [grow]" from "increases in investment for new pipeline" in the years to come, courtesy of governments and oil and gas companies that need its products.
• And Tenaris is no run-of-the-steel-mill company, either. CAPS All-Star carbonates argued last summer that its "[c]oiled tubing drilling has developed into a new technological tool of the drilling industry that cuts drilling costs by about 50% where it can be used." Our player continues: "New developments are allowing it to be used for directional drilling and depths as deep as 10,000 feet, making it the most likely choice for drilling resource plays. Since big resource players [Devon (NYSE: DVN  ) , Southwestern (NYSE: SWN  ) , Chesapeake Energy (NYSE: CHK  ) ], etc.) currently have drilling plans in the thousands of wells per year, companies such as Tenaris which make quality tubing will be selling lots of drill strings."
• Summing up the bull thesis, engineeringeddie wrote last November: "Recession or no recession, there's a multi-trillion dollar backlog in oilfield investment worldwide. This well-run company can reliably count on steady orders."

With net profits that have compounded at more than 80% per year over the past five years, it's hard not to love Tenaris. But superb growth stories like this one demand an extra bit of caution, lest we get carried away with enthusiasm. Now that you've heard what the bulls have to say, let me close with just a few words of warning on the bearish side.

As strong as Tenaris' growth has been in the past, analysts aren't certain that the company can keep it up in the future. Consensus projections now call for earnings to grow at less than 6% per year over the next half-decade -- which, by one valuation method, makes the company's price-to-earnings ratio of 15 look a bit pricey. Consider, too, that we've been talking only about GAAP profits so far. From a free cash flow perspective, things don't look nearly so good. In fact, GAAP profits have outrun actual free cash flow in every year of the past five.

Time to chime in
Is the muted free cash flow enough to scare you away from Tenaris, or do you think this growth story can continue? Either way, click on over to Motley Fool CAPS and tell us what you think.

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