Wall Street's Buy List

Actions speak louder than words, as the old saying goes. So why does 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 115,000-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:

 

Recent Price

CAPS Rating

(5 max):

Astronics Corp. (Nasdaq: ATRO  )

$23.75

*****

TransAct Technologies  (Nasdaq: TACT  )

$13.05

**

Synutra International 

$47.89

*

Centerline Holding 

$2.97

*

Nymox Pharmaceutical

$5.42

*

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 price and CAPS ratings from Motley Fool CAPS.

If stars could speak ...
... then the ratings shown above would be wondering aloud: "What is Wall Street thinking this week?" They're buying TransAct?

And don't even get me started on Synutra, Centerline, or Nymox. Those companies can count themselves lucky that CAPS' rating system doesn't go any lower than one star. No, the only stock on today's list that earns CAPS members' respect is Astronics -- and boy, do they ever love that one. To learn what it is that they like about this manufacturer of airplane lighting, electronics, and power distribution systems, let's examine ...

The bull case for Astronics Corp.

  • Writing in May, CAPS All-Star FleaBagger admitted that Astronics faced some, ahem, headwinds: "domestic airlines are sucking wind and not buying electronics for their passengers. [JetBlue (Nasdaq: JBLU  ) ] tried to be a foreign-style airline by not treating its passengers like chattel, and they failed." And yet, FleaBagger reminds us that: "… foreign airlines … still provide nice things for their passengers [and] the Air Force ... still need[s] electronic equipment to drop laser-guided bombs on people and things. ... Electronics for airplanes is not exactly a dying industry."
  • Late last year, CAPS' MMWWMM111 wrote in praise of Astronics': "Recent acquisition of Airborne Lighting from [General Dynamics (NYSE: GD  ) ], expansion of facilities." MMWWMM111 liked the numbers here, too: "low PEG, ROE more than double the industry average, QTLY earnings growth 129.30%, an attractive company with much potential for growth and new contracts."
  • Finally, we come to CAPS legend tenmiles, who observed back in February that Astronics was predicting: "revenues ... up 7% this year and margins to improve." Not super, but hardly a disaster.

And things seem to be improving even faster than expected. Astronics released second-quarter earnings earlier this month, reporting double-digit sales growth and new orders up 35% -- lifting backlog to record levels. So tenmiles' hoped-for margin expansion has yet to materialize, but thanks to all the new orders, Astronics' management felt confident in raising its sales guidance for the year. Seems that whatever problems the airline industry is facing, Astronics clients like Boeing (NYSE: BA  ) , Raytheon (NYSE: RTN  ) , and Embraer (NYSE: ERJ  ) still need to see inside their planes.

Thus, we're now looking at a stock priced at a very reasonable price-to-earnings ratio of 15, but expected to grow its profits much faster -- 20% per year long term. Free cash flow doesn't quite match up with reported net income, but even so, the price-to-free cash flow ratio of 17 looks reasonable to me. In sum, I think we've found a winner here. 

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Astronics Corp. -- or even what other CAPS members are saying. We really want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think. It's fun, it's free, and it just might make you famous.

Embraer is a Motley Fool Stock Advisor recommendation. Get 30 days of free access to everything this market-beating publication has to offer by clicking here.

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. 394 out of more than 115,000 players. The Fool has a disclosure policy.


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