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Wall Street's Buy List

By Rich Smith - Updated Apr 5, 2017 at 7:07PM

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Actions speak louder than words.

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 120,000-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 (5 Max):

Huaneng Power International  (NYSE:HNP)

$26.95

*****

Tanzanian Royalty Exploration  (NYSE:TRE)

$3.00

**

Priceline.com  (NASDAQ:PCLN)

$69.00

**

Conseco

$3.37

**

Acura Pharmaceuticals

$7.78

*

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
Main Street takes a dim view of Wall Street's favorite stocks this week. With a single exception, our list is stocked to the rafters with below average one- and two-star stocks -- but that exception is a doozy.

Huaneng Power International has held its own as a key holding for Motley Fool Income Investor members. Since its recommendation in April, Huaneng has returned more than 3% to its shareholders, primarily in the form of dividends; meanwhile, owners of the S&P 500 index have seen their investments lose 32% of their value.

That's 35% market outperformance, folks -- plenty of reason to take a look at Huaneng, even if we hadn't recommended the stock. But are there other reasons to like it? Let's find out, as we examine ...

The bull case for Huaneng Power International
Back in June, FleaBagger wrote:

HNP is a power company in China that is trying out a new nuclear technology developed by Siemens and ABB (NYSE:ABB). It sounds like a pretty sweet concept, making nuclear cleaner, safer, and more cost effective than ever before. It's a modulated, uranium pebble-powered, helium-cooled reactor. ... The easily expanded modulated design decreases costs and improves flexibility. This is clean energy at its finest.

New technology is fun. But as Terok1313 pointed out in May, there's a more basic reason to own Huaneng:

Is Baidu (NASDAQ:BIDU) really the next Google (NASDAQ:GOOG)? I don't know. Will Ctrip (NASDAQ:CTRP) teach a vast new middle-class how to vacation? Ya got me. Technology is pretty fickle, and I'm not going to try and predict where it will be five years from now. ... But one thing I will guarantee ... the world will still need ways of generating and distributing electricity in five years, and China in particular is going to need a lot more of it than it has now.

In June, CAPS All-Star saunafool said of Huaneng:

… a power company with a lot of capacity in a growing economy that needs all of their product, a reasonable valuation, some upside potential with clean power technology, and a heap of debt. Looks like a typical utility stock -- something to pay dividends and maybe appreciate a bit.

So what kind of dividends are we talking about, anyway? According to Yahoo! Finance, Huaneng pays out a monster 6.3% dividend. That stacks up pretty well against Federal Reserve talk of 0% interest rates, I have to say.

On the other hand, I also have to say that I'm a bit concerned in regard to the safety of that dividend. Huaneng has lost nearly $385 million so far this year (according to GAAP) and has burned through more than $2.3 billion. If fuel costs drop, or the Chinese government gives Huaneng a bit of breathing room on the rates it can charge -- then hunky-dory. If, on the other hand, China requires Huaneng to operate at a loss to shore up the rest of the domestic industry, the dividend could go the way of the dinosaur, and with it, Huaneng's ability to beat the market.

Time to chime in
I'm less than thrilled at the prospect of owning a cash-burning, low-dividend-paying utility company with 5% prospective growth rates and a forward price-to-earnings ratio of 84 -- but that's just me. If you have a different view of Huaneng, head on over to Motley Fool CAPS and tell us.

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

Fool contributor Rich Smith owns shares of Priceline.com. You can find him on CAPS, pontificating under the handle TMFDitty, where he's ranked No. 1,935 out of more than 120,000 members. The Fool has a disclosure policy.

Ctrip.com is a Motley Fool Hidden Gems selection, and Priceline.com is a Stock Advisor recommendation. Huaneng Power International is an Income Investor and Rule Breakers dual pick. Google and Baidu.com are also Rule Breakers picks. Try any of our Foolish newsletter services free for 30 days.

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Stocks Mentioned

Huaneng Power International, Inc. Stock Quote
Huaneng Power International, Inc.
HNP
$18.34 (5.57%) $0.97
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$121.68 (2.39%) $2.84
Booking Holdings Stock Quote
Booking Holdings
BKNG
$2,120.98 (2.77%) $57.22
Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$140.36 (0.70%) $0.98
ABB Stock Quote
ABB
ABB
$30.75 (0.79%) $0.24
Trip.com Group Limited Stock Quote
Trip.com Group Limited
TCOM
$26.28 (1.31%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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