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 29,000 lay and professional analysts and 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
Wall Street's hottest picks get a tepid reception on Main Street this week. Of the seven companies making the list, CAPS players rate most of them likely underperformers and endorse just one. That one: North American Galvanizing & Coatings (NAGC). Three guesses what this company does for a living.

You win!
That's right, dear reader. NAGC galvanizes and coats iron and steel products, so as to minimize those embarrassing rust spots. Not the sexiest of businesses, admittedly, but when your stock is up three times in one year, a lack of sex appeal can be forgiven.

The bull case for NAGC
Foolish investors have done just that. Over on CAPS, NAGC gets 30 outperform ratings to just one underperform call and enjoys the unanimous approval of all four All-Stars who've taken a look at the company. What galvanizes these investors and sprays them with a shiny coat of enthusiasm? Let's find out:

• Half of the investors who've posted pitches on NAGC appear to be momentum players, who cite the stock's "good chart" and an imminent "3-for-2 split."
  
  
• But other investors give more fundamental reasons for their enthusiasm. CAPS newcomer Ahova, for example, says: "Strong global demand for Metals at the moment. Company processes steel so, producers will require the service."
  
  
• Meanwhile, SteadySaber praises the firm's rapid growth in earnings and its ability to "raise their prices even more than when the cost of zinc goes up." SteadySaber considers the firm's "15 multiple too low for a cyclical with triple digit earnings growth." Crunching some numbers, he argues that if the firm earns his expected $1.36 this year, a "p/e 15 gets you a $20 stock" (30% upside), and that if "earnings ... continue to grow sequentially ... a realistic price target is around $30."

Time to chime in
Then again, over the past 12 months, NAGC has earned only $0.71 per share -- which makes SteadySaber's thesis dependent on the firm's increasing its earnings at least 92% this year. So is this an investment thesis strong as steel, or is it just a sugar-coated hypothesis?

Whatever your opinion, we'd like to hear it. Come on over to CAPS, and tell us what you think.

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

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 No. 1,291 out of more than 29,000 rated players. The Fool has a disclosure policy.