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 28,000 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
Merger fever continues to sweep Wall Street this week, as today's list is dominated by big names involved -- or rumored to be involved -- in big buyouts. Wall Street seems all too happy to "buy on the news," "buy on the rumor," or buy for any other reason it can think of. In contrast, individual investor sentiment, as reflected on CAPS, is a bit more cautious.

Investors seem especially leery of biting on the rumored buyout of AK Steel by Arcelor Mittal (NYSE:MT), even though the price offered (as reported by the Financial Times), is a good 12% higher than today's price. Nor do they seem particularly enthusiastic about buying Alcan in hopes that Alcoa's (NYSE:AA) bid will survive antitrust concerns and nationalistic sentiment up north.

The bull case for Terra Nitrogen
Contrast that with the high marks given to fertilizer king Terra Nitrogen, recently profiled by fellow Fool Dave Mock in "Stocks That Pay You to Retire." Producing and distributing nitrogen-based fertilizer may not be the sexiest of industries, but it's good enough to earn this limited partnership 176 outperform ratings from our CAPS players -- including endorsements from 46 of the 50 All-Star investors who've looked at it. What's got them so high on nitrogen? Let's find out.

• JnThreeEighteen explains why nitrogen is on fire: "95 million acres of corn to be planted to support the recent interest in ethanol production. Supplementary nitrogen has to come from somewhere."
• While admitting that this is a "decidedly non-glamorous industrial business," pbgibbons is willing to trade glamour for a "very significant dividend. Decent capitalization and p/e ratio."
• As does DrKrizzle, who also likes Terra Nitrogen's "relatively low P/E and great dividend," and calls it "a relatively stable business and ... the kind of thing boomers will like to buy and keep for the dividend."

Time to chime in
So what do you say, boomers? Is the Doc right -- do you love Terra Nitrogen's dividend? Or do you turn up your nose at this fertilizer firm's dependence on a perhaps fad-ulent ethanol craze? Whatever your opinion, we'd like to hear it. Come on over to CAPS and tell us what you think.

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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 ranked No. 1,581 out of nearly 29,000 rated investors. The Fool has a disclosure policy.