Wall Street's Wish List

"Actions speak louder than words."

It's an old saying, with more than a grain of truth to it, I'll warrant. So why is it that when the Wall Street firms merely "initiate coverage" or "upgrade" their ratings on a company, that gets all the news coverage? After all, those are only words, when what really matters is how the big boys act. Luckily for Wall Street watchers, finding out which professionals put their money where their corporate mouthpieces are has become relatively easy in this Internet age of ours. All we have to do is read MSN Money's list of which companies the Street is most actively buying.

But once we've done that, what next? After all, "Monkey see, monkey do" may not make for the soundest of investment strategies. That's where Motley Fool CAPS can help. The Fool's newest venture into the realm of collective intelligence collects ratings from more than 24,000 rated lay and professional analysts, then overweights the most successful raters' opinions to come up with a "CAPS rating" from one to five stars (five being the best). If Wall Street's buying and the smartest investors in Fooldom say they're right to do so, then that should get your attention.

And so, let's meet today's list of contenders:

Wall Street vs. Main Street
Main Street seems a bit skeptical about Wall Street's top picks this week, giving the majority of its wish-list stocks average or below-average ratings. The two exceptions are Canadian oilfield equipment maker Tesco, and today's top seed: Smith Micro.

Who is Smith Micro, you ask? Don't feel embarrassed if you've never heard of it. In fact, fellow Fool Dave Mock profiled the little maker of "innovative software tools and mobile communications solutions" in a recent column titled " 3 Winners You Don't Know About." There, Dave praised the firm's "rapid revenue and earnings growth" even as he worried about the firm's dependence on Verizon (NYSE:VZ) for "nearly three-quarters of Smith Micro's revenue in the past quarter."

For further background on the company, we turn to the gang at Motley Fool CAPS, where 321 of our fellow investors have heard about the company -- and 309 of them like it a lot. Whittling down the commentary to our elite cadre of CAPS All-Stars, here's what they have to say about Smith Micro:

• We begin with CAPS legend TMFPlatoish1, who lists Smith Micro's pluses as including the facts that it: (1) "is debt free and sitting on a significant cash position gained from a recent equity offering" and (2) recently acquired the "Stuff-It" compression technology, in which TMFPlatoish1 sees the potential for a "killer app" when used to compress JPEG images on cell phones. On the downside, he cautions: "Management is overly optimistic at times, abuses options to some extent, and can be viewed as occasionally arrogant."
• Next up, fellow All-Star sophistabubba calls Smith Micro "a play on the wireless internet space," and one "poised to greatly increase earnings through several new products which are attractive to both cellphone carriers and handset manufacturers."
• And let's end with tcufrog1999, who neatly summarizes Smith Micro's promise and peril in noting: "SMSI provides several unique products and services that help the wireless providers (Verizon, Sprint, etc) generate revenue growth and improve customer churn."

Where's the peril in that? Well, I have to wonder -- if these products are really so great for all of the wireless providers, why is it that only one provider is providing three-quarters of Smith Micro's business? The others don't seem to be beating down Smith Micro's door, clamoring to get in on the good technology.

Time to chime in
Or is this story "to be continued"? Now that Verizon has paved the way, might Smith Micro be on the verge of signing up Verizon's peers as well? On Motley Fool CAPS, you pay no money to take your chances -- just click on through and tell us what you think.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 38 out of more than 24,000 raters. The Fool has a disclosure policy.