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 140,000-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
|
|---|---|---|
|
China Green Agriculture |
$17.33 |
**** |
|
Dana Holding |
$8.21 |
** |
|
Nanometrics |
$12.50 |
* |
|
US Airways |
$4.65 |
* |
|
UAL Corporation |
$9.83 |
* |
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. And down here on Main Street, we're cheering them on ... publicly, while privately trying to hide our mirth. I mean really -- US Airways? UAL Corp? It's been nearly a decade since Beware of Steel and Airlines came out, and these guys still haven't read it?
But perhaps I'm too hard on Wall Street. After all, there is one stock on today's buy list that Fools do approve of ...
The bull case for China Green Agriculture
CAPS member InvestingMonk introduces China Green Agriculture to us as a seller of "high quality, strong-branded, organic fertilizer to China." As the "population increases, arable land decreases, and people become more aware of environmental dangers," InvestingMonk sees a bright future for China Green.
3rdArmored agrees, calling this stock idea "a no brainer. They are making a big move in R&D, and it will pay of big in a few years. Eating is not a passing fad." But speaking of fads, let's not underestimate 'em. As stephencmyers points out, it's not inconsequential that China Green "[h]as all the right buzz words in the name-China, Green, Agriculture. Just kidding."
Hey, that naming strategy seems to have worked out well for Yingli Green Energy
Fortunately for China Green Agriculture shareholders, there's power in numbers, too. Numbers like:
- A P/E of 20, and a projected growth rate of nearly 24% per year over the next five years.
- The number of dollar bills it has in the bank ($35 million) versus the amount of debt it owes ($2 million).
- The firm's net profit margin of 43%, a number so high it makes even uber-profitable fertilizer makers like Potash
(NYSE:POT) and Mosaic(NYSE:MOS) green with envy.
Foolish takeaway
Not all of China Green Agriculture's numbers are as attractive, of course. Fact is, I'd probably have invested in the company myself months ago, were it not for the fact that its free cash flow has lagged reported net income. In the last 12 months, free cash has totaled just $3.5 million, a fraction of the $16 million that the company reported as income. But hey, you can't have everything, right? And there's always China Green Agriculture's lucky name to fall back on ...
Time to chime in
Or not. Just because Wall Street thinks this one's a winner doesn't mean you need to agree. And just because I am leery of the firm's weak free cash flow doesn't mean you should wait for them to improve before buying -- to the contrary, by the time they have improved, the profit may already have all been made on this stock.
Weigh the pros and cons, then tell us your thoughts about China Green Agriculture. Your chance to be famous is just a mouse-click away.
