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 79,000-plus lay and professional investors on Motley Fool CAPS agree with the Street's opinions, it might be time for buying.

Here's the latest edition of Wall Street's Wish List, enhanced with CAPS investors' opinions of the companies involved:

Wall Street vs. Main Street
Main Street seems underwhelmed with Wall Street's favorite stocks this week, panning the majority of the professionals' picks and giving just one of them above-average marks. That one: big-screen movie mogul IMAX. Let's shuffle on over to CAPS and listen in as Fools discuss the company, in full surround sound and 3-D animation.

The bull case for IMAX

• SkiSox sums up the bull thesis thusly: "Everyone loves the product. Traditional movies are done-for. HD big screen home theaters are in. The only reason to go out would be for the IMAX experience, domed screens, 3-D. HD IMAX is next; look out."
• rockstarman08 enthuses: "If there bringing 100 screens to the most popular theater than there definitly going to see some mark up's." (Sorry, Regal (NYSE: RGC) and Cinemark (NYSE: CNK). I know you're working with IMAX, too, but I'm pretty sure rockstarman08 is talking about IMAX's recent announcement of a 100-theater deal with AMC.)
• But perhaps the best pitch of all, and by far the most recommended, comes from CAPS All-Star DoctorMAD: "Over the past 18 months everything that can go wrong has gone wrong for Imax. Earnings misses, some declining numbers on installs, a pair of overpaid dufus CEOs, a botched attempt to sell the firm, investigations into their accounting, and oh yeah, they haven't filed a 10-K yet for 2007. And it's July 10th. ... But the opportunity lies in that despite all the problems, never before has IMAX looked better positioned as a canidate to help reinvorgate the movie industry. Record showings and some recent install contracts with large chains means IMAX could be getting ready to finally live up to it's potential. I love this as a turn around story. ... we'll see in a few months how right I was."

As it turned out, the good doctor was very right. To the tune of 50 percentage points of market outperformance on his pitch on July 10, 2007. And by the way, while the "dufus CEOs" are still in office, IMAX did eventually get around to filing that pesky 10-K -- in November.

But if you're looking to duplicate DoctorMAD's performance, there are still plenty of problems left at IMAX, and solving them could lift the stock further. A lack of profits and, in fact, increasing losses are two. Negative cash flow from operations is another. Don't forget falling margins in the most recent quarter.

All of which could make angels fear to tread here. And I wouldn't necessarily advise Fools to rush in, but a cautious entry and look-around might be worth your while (as, indeed, the Fools at Motley Fool Rule Breakers have done already).

Time to chime in
Of course, the goal of this column isn't just to tell you what I think about IMAX -- or even what other CAPS players are saying. We also want to hear your thoughts. Is IMAX really worth two times its annual sales, when most companies in its industry go for 1.2 times? Does the opportunity here justify the risk of missing profits? Click on over to Motley Fool CAPS and tell us what you think.