The Stocks the Funds Are Buying

We all know which stocks have made Wall Street's Buy List. What I want to know -- and I'm guessing you do, too -- is who's doing the buying. Which funds are buying Wall Street's most popular stocks ... and how does their judgment compare with that of our Motley Fool CAPS community?

Here's our latest group of contenders:

Company

Last closing price

CAPS rating (out of 5)

First Cash Financial Services (NASDAQ:FCFS)

$12.82

****

Akeena Solar

$8.07

**

Tessera Technologies

$21.66

***

Standard Pacific

$5.22

*

Systemax

$12.74

*

Sources: Motley Fool CAPS, Yahoo! Finance.

Pawnshop and payday lender First Cash Financial has plenty of fund fans. But only one gets the five-star treatment from Morningstar.

Allow me to introduce you to CMG Small Cap Growth (COSCX), a no-load winner whose relatively new team -- top managers Wayne Collette and George Myers took over in February 2006 -- is off to a strong start. Small Cap Growth outpaced category peers by five percentage points in 2006 and more than 14 points last year.

Here's a look at the top five domestic stocks Collette, Myers, and team own today:

Company

Last closing price

CAPS rating (out of 5)

ICON (NASDAQ:ICLR)

$64.30

*****

Hologic (NASDAQ:HOLX)

$29.47

*****

Vocus (NASDAQ:VOCS)

$25.29

**

CF Industries (NYSE:CF)

$133.75

****

SBA Communications

$29.90

**

Sources: Morningstar, Motley Fool CAPS.

Talk about some interesting choices. More than 500 Fools have given medical-device maker Hologic the thumbs-up in CAPS. A modest 1.14 PEG ratio based on projected 2008 earnings per share speaks well for their choice.

But, of these five, I like contract researcher ICON. Medical science is advancing at a blistering pace, and establishing excellent processes for clinical trials, while necessary, can be both expensive and time-consuming. Outsourcing this function when appropriate makes sense.

As it does in other industries. Flextronics (Nasdaq: FLEX  ) has thrived as computer manufacturers have outsourced manufacturing and assembly. Taiwan Semiconductor (NYSE: TSM  ) has enjoyed success by building and mass-producing chips for budding designers.

And here's the best part: ICON is cheap. CAPS investor dollarpimp explained the rationale in this pitch from January. Quoting:

Discounted earnings valuation assuming 25% earnings growth over 10 years indicates this stock is selling at a substantial discount. Even assuming 20%, it's fairly priced. Just backed off a new high, buying on the dip. Healthcare sector will outperform.

Agreed. But I'm even more interested in what you think. Would you own ICON, or any of the stocks in CMG Small Cap Growth's portfolio, at today's prices? Log into CAPS today and let us know what you think. It's 100% free to participate.


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