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 165,000-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 after close of trading on Friday. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Up on Wall Street, the pinstripe-and-wingtip crowd are buying these stocks like there's no tomorrow. But down here on Main Street, Fools are busy debating whether they've got a future at all. Take SanDisk for instance. The stock has been a recurring participant on Wall Street's Buy list for more than a month now -- and maybe there's a reason for that. Seeing all the iPods and Androids and Blackberries (oh my!) coming onto the market, CAPS member EvilPhD hypothesizes: "more apps on mobile phone = necessity for flash chips via SanDisk. Solid State Drives."

The proliferation of smartphones also underlies the bull thesis for Sprint -- at least, in one Fool's view. kansasav8r argues: "The HTC EVO smartphone is selling like hotcakes (new high on the number of phones sold on a single day for Sprint), which translates to some new customers for them with two-year contracts. There are a number of larger city rollouts of their WiMAX Clearwire 4G network for the remainder of this year, which should also help to keep the momentum going."

And yet, judging from their two- and three-star ratings, it appears few individual investors agree with Wall Street that these stocks are the best places to put new money now. The hi-tech stock Fools really like to outperform is none other than organic light-emitting diode pioneer and Motley Fool Rule Breakers pick Universal Display. Let's find out why.

The bull case for Universal Display
Granted, Universal Display is not the kind of stock you'd normally expect to outperform the market. It's unprofitable today, for one thing, and few investors expect it to earn a profit next year either. UD's a consistent burner of cash, and a review of its financials offers little evidence of any "uptrend" of lower and lower levels of cash consumption, leading ultimately to free cash flow-positivity at some definite point in the future. Yet while admitting that the company's financials are "ugly," CAPS All-Star DarthMaul09 believes UD has "the new hot tech product with huge upside potential."

AlbertaBorn goes even farther than that: 

The future market for Universal's technology is stunning. They currently have contracts for all major display manufacturers and are branching their technology to new and exciting industries. Like many say, this will be a long-term value play, but once they perfect their cheaper manufacturing techniques currently under development, we could see OLED completely replace old-school LED technology, with Universal holding patent rights for the technology itself, as well as all feasible methods for manufacture.

Indeed, CAPS member knnryerye believes we'll soon see, "OLED TV's ... popping up. Military will look to use this technology for handheld devices. Then add to all of it the replacement of lights with oled panels. This company will continue to grow over the next few years."

Seeing the future, well-lit
Most investors, when thinking of Universal Display, focus on the company's television screen technology. But it's actually knnryerye's last comment that caught my attention. You see, about one year ago, Popular Mechanics ran an article on the use of OLED for lighting purposes. Seems General Electric (NYSE: GE) has partnered with Energy Conversion Devices (Nasdaq: ENER) and the National Institute of Standards and Technology to develop OLEDs for use in lighting buildings.

One year later, the tech appears to be gaining traction. Just yesterday, in fact, Bloomberg published a piece on GE's OLED plans, and how OLED lighting has become a focal point of the company's research, and its bid to reclaim a bigger portion of the $17 billion "lighting market" from current rivals Siemens (NYSE: SI) and Philips (NYSE: PHG). Turns out, GE has a team of scientists busy right this moment, working to develop "light-producing sheets that may soon outshine the [electric light] bulb."

Foolish takeaway
Now, I'm no electrical engineer myself, nor am I a patent lawyer. I do not know to what extent GE's research and Universal Display's existing technology overlap, or how much licensing revenue UD might be due if GE's commercialization of this technology begins to bear fruit. What I do know, however, is that when a behemoth of industry like GE decides to devote half of its lighting division's annual R&D budget to a technology like LED and OLED, chances are good that there's something "there" there. And that as a pioneer in the technology, Universal Display should be in a good position to cash in on whatever it is.

Mind you -- I'm not sufficiently convinced of the thesis as to overcome my skepticism about UD's numbers, and its lack of free cash flow. (Call me a Luddite, but I still insist on seeing profits at my investments.) But that's just me. More adventurous Fools might well be willing to invest a few bucks in hopes of grabbing the ground floor on this emerging technology.

If that's the way you look at Universal Display -- or even if it isn't -- we'd love to hear what you like (or loathe) about the company. And whichever way you lean in the debate, we've got just the place to state your case: Motley Fool CAPS.