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 160,000-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 and CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
After seeing Friday's and yesterday's sudden sell-offs, you might think that no one's buying anything, but the truth is quite the opposite. Up on Wall Street, the pinstripe-and-wingtip crowd are still loading up on their favorite tickers. And down here on Main Street, at least some Fools agree with their "Wiser" peers.

For example, CAPS All-Star cigamarc spotlighted US Gold as a company boasting a "Strong cash position, no debt" and with "Prospective properties in the US and Mexico. Existing resource base with exploration potential" late last year. 

Member wpiarull prefers Eldorado Gold, but cites some of the same reasons that investors love US Gold: "us and global fears of impending financial collapses in usa, european economies."

In troubled times, a lot of investors place their faith in the shiny metal's security. The companies in question, however, don't seem so secure. US Gold still hasn't turned a profit. And while Eldorado has struck gold for investors, its doubled stock price over the past year has left the stock trading at a rich 50-times multiple to its profits. Considering that most analysts don't believe the company will grow these profits any faster than 5% per year over the next five years, I honestly don't see the attraction here. If the gold bug's bit ya, you'd be better off buying something like Yamana Gold (NYSE: AUY) or perhaps Newmont Mining (NYSE: NEM) -- companies sporting lower P/Es, and much, much faster growth prospects.

But enough about gold stocks. Today's top-rated stock on the Buy List has nothing to do with shiny rocks, and everything to do with the shiny prospects for a reviving aerospace industry.

The bull case for Astronics...
... actually gets off to a pretty weak start. CAPS member EclecticRecluse says the company enjoys "High Public Opinion with Low Relative Strength." (Nothing wrong with having fans, but generally speaking, great-performing stocks have high relative strength.)

Yet CAPS All-Star BudandMolly insisted a couple of years ago that this stock might be worthwhile: "This is another great aviation stock that is undervalued with strong growth potential and a corner on its market. It makes lighting, power distribution, and flight control parts for the newest aircraft. It should be bought on these large dips and held longer term."

And according to fellow All-Star investor biffinnh, there's even the possibility of a buyout premium lifting these shares higher. Gazing into a crystal ball back in 2008, biffinnh wrote, "They look like a takeover target for one of the bigger aerospace companies to me."

Buy the numbers
What might attract an acquirer to Astronics? For one thing, it's coming off a simply superb quarter for profits growth, with first-quarter earnings up 143%. Astronics boasts a better projected growth rate than larger aerospace players farther down the supply stream, such as parts-maker Spirit AeroSystems (NYSE: SPR) or plane-assembler Boeing (NYSE: BA). And with new orders up 76% year over year in the most recent quarter -- and significantly ahead of sales -- it looks like analysts' growth predictions are more than just hot air.

Foolish final thought
For all this potential, the company still sells for a below-market valuation when priced on its forward earnings (a 13 P/E). Best of all, the company has evolved into a strong cash flow generator in recent quarters -- a significant development in light of its hit-and-miss record of generating cash.

Putting it all together, I personally believe there are better bargains to be found in the defense and aerospace sector. But while I won't be making Astronics my top pick, neither can I entirely discount Wall Street's -- or Main Street's enthusiasm. There's definitely some profit potential in this one.

That's my opinion. What do you think about Astronics? Click over to Motley Fool CAPS now, and tell us all about it.

Astronics' stock has more than doubled over the past year. How do you know when "the train has left the station" and it's too late to buy? Here's how.