Wall Street's Buy List

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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):
iCAD  (Nasdaq: ICAD)	$4.28	*****
NPS Pharmaceuticals (Nasdaq:   NPSP)	$8.10	**
R.H. Donnelley	$3.75	**
FirstFed Financial	$15.70	*
Star Scientific (Nasdaq: STSI)	$3.22	*

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.

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
Main Street investors are somewhat less than impressed with Wall Street's top picks this week. Of the five stocks hitting the list, four get panned, with below-average one- and two-star ratings.

And then there's iCAD.

The bull case for iCAD

• "Who's iCAD," you ask? (Right after asking if I forgot a capital letter somewhere, I'm guessing.) Allow CAPS member stocks4lunch to elucidate: "The company brings a new technology to cancer detection. It assists doctors in finding very hard to detect initial cancer cell growth. I would insist on this technology if I needed verification of X-RAys, Cat Scan, etc"
• In fact, several CAPS members said much the same thing, which lends support to CumberlandRidge's pitch of last year: "An aging population needs and uses more healthcare all the time. For womens healthcare specifically, breast cancer is a large problem of detection early. This co. is a pure play in CAD and is already saving womens lives." (By the way, I should probably mention that as used here, CAD means not the usual "computer-aided design," but rather "computer-aided detection" -- digitizing printed, photographic, and other hard-copy images for ease of use.)
• What's more, according to CAPS All-Star GoatGruff1 (writing last June): "Only 2 [real] players in the market. Possible acquisition for the big players to integrate with the hardware."

Actually, according to iCAD itself, it competes with at least four big-name players: GE's (NYSE: GE), Philips Electronics' (NYSE: PHG), and Siemens' (NYSE: SI) health-care divisions, and Eastman Kodak (NYSE: EK). (But on the plus side, perhaps that just doubles the list of potential buyers?)

In any case, I rather fear a buyout is the best hope investors have of profiting from this one. The stock sells for a nosebleed P/E of 91, and its price-to-free cash flow ratio isn't much better -- 50. Whichever metric you prefer, though, the stock doesn't look particularly cheap if it only lives up to the 25% growth rate that Wall Street has pegged for it.

To me, those numbers make iCAD a "like-the-idea-but-pass-on-the-price" kind of stock. Let the Wall Streeters keep this one to themselves.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about iCAD -- 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.

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