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 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 170,000-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:

Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money after close of trading on Friday. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Up on Wall Street, the professionals think these are four stocks are the greatest things since sliced bread. (And by "bread," I mean money.) But not all of our CAPS members are convinced.

Beginning at the bottom, Tesla Motors may be the hottest stock in the automotive world (or at least it was before General Motors (NYSE: GM) came roaring back), but CAPS members stare at the company's triple-digit negative profit margin, its utter lack of cash flow, and a balance sheet rapidly depleting of cash -- and shudder. Oh, the company has a few supporters: CAPS All-Star Jeffreyw believes that by collaborating with Toyota, Tesla will "make electric vehicles cheaper with greater range and faster recharge time." But stacked against the cons, I think the stock's one-star rating is entirely appropriate.

Nor is he the only Fool going against the grain on these unpopular stocks. CAPS member 4thsuper is Jazz-ed about Small Pharma: "Earnings up 583% over same quarter last year. Sales up 45% over same quarter last year." mrhineheart sings the praises of telecom-cum-natural gas reseller IDT: "Debt is low and cash is high. Price/Sales is .29. Buy! Buy! Buy!"

But really, the only place we see Main Street optimism meeting Wall Street buying power this week is in the sound studio of a little radio show operator by the name of Global Traffic Network.

The bull case for Global Traffic Network
"G-Net" produces traffic and news reports, and trades them to radio and television stations in exchange for advertising timeslots -- which it then resells to advertisers, an arrangement that CAPS member Tango12a once described as "an interesting concept, with growing commuter bases overseas it could go far."

Fellow CAPS member johnnymack91362 is more blunt, calling the whole idea "a gamble." Still, Johnny's optimistic about the stock, and I have to admit that, so far, he's been right -- his March 2008 recommendation to buy G-Net is beating the market by better than 27 percentage points.

Back to the barter economy
Personally, I lean more toward Johnny's suspicions on the business model. (Didn't the barter system of economics go out of fashion in the 1800s?)

What worries me more, though, is the idea of traffic reports generally. I mean, if G-Net can convince radio stations that its reports have value, is willing to accept airtime in payment, and can resell that airtime at a profit -- more power to 'em. What I really wonder, though, is how much longer radio traffic reports will remain relevant in the 21st century.

I mean, think about it: Before hopping in your car, do you want to wait around for the traffic report to come on the TV or radio to know what the roads are going to look like? Personally, I'm more likely to take a quick look at Google Maps, check the traffic button, and get an up-to-the-minute, Technicolor picture instantly. Either that or if I'm already on the road, I'll just check the real-time traffic patterns shown on my GPS device. In short, it seems to me that between them, Google (Nasdaq: GOOG) and Garmin (Nasdaq: GRMN) have done a good job of making traffic reporters irrelevant ... and with them, the very service that G-Net depends on for its lifeblood.

Foolish takeaway
Now, combine that with the stock's obvious overvaluation -- 249 times earnings seems a bit much for a 15% grower, don't you think? -- and I honestly don't see what Wall Street finds so attractive about this stock. (Aside from its momentum.)

But hey, I'm a Fool with an open mind. If you see any reason why this company might have a future, we've got a place to state your case. Click over to Motley Fool CAPS now, and tell me why I'm wrong.

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