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 135,000-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 stars)
|
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U.S. Global Investors (Nasdaq: GROW )
|
$10.60
|
*****
|
|
Allied Irish Banks (NYSE: AIB )
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$6.25
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*****
|
|
Canadian Solar (Nasdaq: CSIQ )
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$15.70
|
***
|
|
STEC (Nasdaq: STEC )
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$18.58
|
**
|
|
OncoGenex Pharmaceuticals (Nasdaq: OGXI )
|
$24.98
|
**
|
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 snapping up these stocks just as fast as they can hit the "buy" button. Down here on Main Street, though, we're taking a more nuanced view. CAPS members aren't particularly fond of flash memory maker STEC, nor is cancer-drug specialist OncoGenex a popular subject of conversation on the cocktail party circuit.
Canadian Solar? Hey, who could hate Canada? But what we really like, it appears, is global finance. As in Allied Irish Banks (a Motley Fool Global Gains recommendation) and mutual fund manager U.S. Global Investors. If you want to learn more about the former, our team over at Global Gains will be happy to fill you in. But for now, let's take a look at the less well-known five-star stock on the list. Let's examine ...
The bull case for U.S. Global Investors
Deandra88 brought this stock to our attention last summer, calling U.S. Global Investors "a true value stock." What makes it so? A "[l]ong company track record (been around since 1968), coherent and logic explanation for last earnings report, ... large pool of diverse mutual funds on distribution, and great buy price."
COMOInvestments was likewise attracted to U.S. Global Investors for its "stable full of top performing funds." What's more, COMO thinks the firm has a "[b]eautiful balance sheet including no long term debt." Likewise, rutmarfis looked on the firm's "cash & book value" with approval, and added that U.S. Global Investors "looks like a good solid company."
Of course, those pitches were all made last year; and Wall Street is only getting excited about U.S. Global Investors now. Before we follow its lead, perhaps we should ask: Have nine months' time left the buy thesis on this stock intact?
Well, that depends. So far as the balance sheet goes, I'd have to answer: "Yes." At last report, U.S. Global Investors had nearly $25 million sitting in the bank (15% of its market cap) and no long-term debt. It's hard to argue with that.
In other regards, though ... well, I don't want to knock the firm, but it looks to me like U.S. Global Investors really doesn't stack up all that well against the competition. The firm's operating margin is only about half that of larger rivals Affiliated Managers Group (NYSE: AMG ) or Federated Investors (NYSE: FII ) . Forward P/Es on the firms show a similar disconnect, with U.S. Global Investors selling for what appears a very high price relative to its rivals.
In the end ... maybe I'm missing something, Fools, but when you get right down to it, I honestly don't see what's got investors -- or Wall Street -- so excited about this stock. To me, it's just "all right." No better, no worse.
Time to chime in
Am I missing something? If you know what it is, then here's your chance to fill us in. Click on over to Motley Fool CAPS and tell us why U.S. Global Investors should be a top choice for, um, U.S. global investors.
Motley Fool CAPS: It's fun, it's free, and it just might make you famous.
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