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)
ION Geophysical  (NYSE: IO  )	$5.23	*****
Fuel Systems Solutions (Nasdaq: FSYS  )	$50.47	**
Sonic Solutions  (Nasdaq: SNIC  )	$9.90	**
East West Bancorp	$14.09	*
Playboy Enterprises  (NYSE: PLA  )	$4.78	*

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 are frantic to own these stocks. But down here on Main Street, we're beginning to question their sanity. After all, only one of these companies, Fuel Systems Solutions, is profitable over the last 12 months -- and even that one is burning through its cash. Yet according to Wall Street, these are the hottest prospects available.

If you ask the 140,000-and-counting non-professional investors who make up Motley Fool CAPS, there's only one stock on this list that's worth owning. That's the one we'll focus on today.

The bull case for ION Geophysical 
All-Star Teacherman1 fired up the ION discussion back in September, introducing us to the stock as "a developer of technology and equipment for Seismic Contractors, and Seismic Data Libraries for the E & P sector. ...They provide systems for both land and sea seismic data, and have been significantly expanding their global library of data. The product which interests me the most is their "Firefly" cable less land system. The new advanced system was just put into use in mid 2008, and they sold their first system in early 2009."

Teacherman1 isn't ION's only fan, either. According to All-Star PearlandTX (a pretty auspicious name to be recommending an oil & gas industry stock): "The capabilities provided by [ION] are precisely what oil & gas companies need to increase their hydrocarbon reserves and production." And of course, ION's popular with the clients as well. Two of the biggest names in hydrocarbons -- ExxonMobil (NYSE: XOM  ) and BP (NYSE: BP  ) -- use ION's tech to help 'em decide where to dig.

Why? mypieceofpie explains: "As the limited natural resource of oil becomes harder to pull, locating substantial reserves is most important. Ion Geophysical is on the leading edge of this technology."

Now, no stock is perfect, and ION certainly has its share of corporate warts. For one thing, there's the debt load -- ION carries more than $270 million in debt against a cash balance of less than $20 million. (In contrast, another company in the broader sector, Motley Fool Hidden Gems recommendation Dawson Geophysical (Nasdaq: DWSN  ) , is debt-free and cash-rich.)

For another ... remember how I told you most of the stocks on today's list are unprofitable? Well, ION's one of 'em. However, there is good news -- the company's lack of "profit" stems entirely from the fact that between Q4 2008 and Q1 2009, the company took about $290 million in goodwill and asset impairment charges. From a cash perspective, meanwhile, this company is still churning out profit by the bucketload. Over the last 12 months, ION's free cash flow topped $93 million -- meaning that right now, you can own this stock for less than seven times free cash flow.

Even factoring its debt into the equation, ION sells at an enterprise value to free cash ratio of 10.

Time to chime in
Wall Street's best and brightest seem to think that's a fair price to pay, and now that the oil market has found its second wind, it seems the vast majority of CAPS members agree with them. But here's the real question:

Since tumbling to its lows back in March, this stock has already rebounded strongly -- up five times in price. How much longer can these kinds of gains continue? Click over to Motley Fool CAPS now, and tell us what you think.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.