Wall Street's Buy List

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 145,000-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:

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.

Happy New Year! But what year is it exactly? The Great Recession notwithstanding, as 2009 winds down we find the Dow back over 10,000, and the Wall Streeters partying like it's ... 2007. Should you join them?

Survey says: Go for it!
Wall Street traders aren't the only ebullient ones these days. Fact is, not a single stock on today's list sports a below-average rating on CAPS -- not even Jackson Hewitt, which got clobbered on news that its banker won't be helping it offer tax refund loans this year, gutting the tax preparer's business model. Of course, investors are still hotter on some companies' prospects than others', and this week, top honors go to ... AMEX-listed Continucare.

Who?
Never heard of Continucare? Well join the club -- neither have most Fools. Neither had I. And for the most part, neither had Wall Street -- until recently. Only two analysts follow the stock today, and one of 'em only part-times it.

But now that the Great Health-Care Debate of '09 seems to be heading for a conclusion (albeit, probably not before 2010), a lot of Fools are starting to turn their attention to Continucare -- and a lot of that attention has been positive. drarnoldmorgan recently told us how this provider of outpatient medical services is helping to "keep costs down, in the land of ... the elderly" (aka Florida).

titliest78 believes that: "With solid fundamentals, no long term debt, and favorable valuation, this company appears to be in good shape for the years to come." What kind of "solid fundamentals," you ask? BornToBeBullish gives us a list: "5-Year EPS Growth: 14.02% ... 3-Years EPS Growth: 32.88% ... Debt-To-Equity: 0.0 ... ROI: 15.50%."

If you're wondering whether your eyes have deceived you -- they haven't. In a world where giants of health care like UnitedHealth (NYSE:UNH) have seen growth shrink to the single-digit-percent rate, while others like Coventry Health (NYSE:CVH) have seen profits steadily shrinking, Continucare is still growing. Even better, after a mid-decade hiccup, its profits have been steadily climbing at rates higher than its overall sales.

What's more, Continucare boasts high-quality profits. While GAAP numbers show the company "earning" $18 million over the past 12 months, its cash flow statement confirms that Continucare generated roughly 10% more than this on a cash-flow basis: $20 million.

Thus, what we're looking at here is a company with:

• No debt whatsoever,
• $23 million cash in the bank,
• Selling for less than 13 times annual free cash flow, and
• Growing at either 20% per year (in the opinion of the sole analyst venturing an opinion), or 33% (based on recent performance).

Foolish takeaway
Whichever growth rate you think more likely for the future, it's clear this stock is priced to move. The surprise here isn't why Wall Street is buying -- it's why we haven't heard of this success story sooner. My hunch: We'll be hearing a lot more about Continucare going forward.

What do you think of Continucare? Click over to Motley Fool CAPS today, and sound off!