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 140,000-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	Recent Price	CAPS Rating (out of 5)
Manitowoc (NYSE: MTW  )	$9.52	*****
Omniture  (Nasdaq: OMTR  )	$21.51	****
KKR Financial  (NYSE: KFN  )	$4.38	***
Select Comfort  (Nasdaq: SCSS  )	$4.65	***
VIVUS Inc (Nasdaq: VVUS  )	$10.16	**

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 provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Wall Street traders think these stocks will go far. CAPS members agree that a few of them have potential, and like the prospects at Omniture and Manitowoc best.

And me? Personally, I don't see what all the optimism is about at Omniture. Adobe (Nasdaq: ADBE  ) has already promised to buy out the stock for $21.50. Investors have bid up Omniture beyond even that price, however, so perhaps they're looking for a rival bid to emerge. (Google, are you listening? Microsoft? Bueller? Anyone?) Maybe it'll happen, but if it were my money on the line, I'd take Adobe's bid and run with it.

Of course, Omniture still only gets four stars on CAPS. Is five-starred Manitowoc any better? Let's find out.

The bull case for Manitowoc
Mikegee52 calls Manitowoc "a long standing solid company with an excellent reputation. Like most equipment companies it has been hit hard by lack of construction. If you feel construction is due to go or are willing to hold this stock it could be a real winner." rpo143 agrees that a "[g]lobal economic recovery, emerging market demand, etc. will escalate demand for Manitowoc's products and services."

But Manitowoc's got more going for it than just hopes of a construction boom materializing. As gomtw2009 points out:

Manitowoc Company ... now has two core businesses (Foodservice & Cranes). There recent aquisition of Enodis has been an eye-opener. ... I love the Enodis acquisition, strategically speaking; Manitowoc can now outfit the full restaurant kitchen which is very compelling for single sourcing! They are very good at de-leveraging and paying down debt.

Let's hope so. Because as things stand right now, this crane's not looking all that sturdy. When Manitowoc beat out Middleby (Nasdaq: MIDD  ) to acquire Enodis last year, it put itself deep in hock to pay for its prize. Result: Manitowoc's balance sheet now brims with $2.5 billion in debt (against barely $122 million in cash.) With the firm generating a bare $9 million in free cash flow over the last 12 months, paying down the debt is going to take some real effort.

What's more, even when the recovery does arrive, Manitowoc is going to remain in hock for a good long time. Over the past five years, this company has averaged only $117 million in annual free cash flow. At that rate, it could take Manitowoc about 20 years to pay its debts -- and that's assuming Manitowoc diverts every spare penny it can earn to the purpose, and that the recovery arrives on schedule, returning Manitowoc's cash flow to its former glory.

Meanwhile, most analysts are taking a less sanguine view of Manitowoc's chances. Far from predicting a recovery, they expect to see Manitowoc's profits decline slightly over the next five years.

Foolish takeaway
To me, there's no question what to do with Manitowoc. It's too debt-laden, generates too little cash, and has such poor prospects for growth that I've absolutely no interest in owning the stock. But here's the real question: Considering that Wall Street's best and brightest see the same numbers I'm looking at, and have similarly dim hopes for the company's growth, why are they buying it?

Time to chime in
Seriously -- that's not a rhetorical question, folks. Why are the Wall Street bankers so hot to trot for Manitowoc? If you've got a clue, please share.