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 170,000-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 professionals think these four stocks are the greatest things since sliced bread. (And by "bread," I mean money.) By and large, our CAPS members agree, assigning above-average four- and five-star ratings to each and every one of 'em -- and why not?
After all, FSI has nearly tripled in value over just the past year, and CAPS member Tagit tells us that "deals with Apple and Samsung should keep [FSI] heading north. No debt and profitable helps too." As for goldminer Rubicon ... well, it's not profitable yet, but with gold fetching north of $1,400 an ounce, All-Star investor silverminer expects it will be soon:
The company that prepared the resource estimate for Rubicon extrapolated the data to envision a total resource potential of more than 13 million ounces of high-grade gold within the F2 system. Significant underground development has already been achieved during the exploration process, and the company is well-funded for further advancement.
And these two aren't even the Fool favorites on the list! At four CAPS stars apiece, they're tied for runner-up., with Genomic Health and Mercer Insurance vying for top honors. Because the former is an official Motley Fool Rule Breakers recommendation, I'll defer to my colleagues on that one, and advise you to read their write-up for Fool details on why that stock's a winner. (Take 'em up on their offer for a trial membership, and read it for free.) Instead, I'll tackle ...
The bull case for Gordmans Stores
Never heard of Gordmans? No surprise there. This tiny Midwestern retailer only recently went public, emerging onto the stock market stage with the oh-so-Hoover-esque moniker "GMAN" back in August.
For most of that time, Gordmans has treaded water, stock-price wise, dropping post-IPO, struggling back, only to drop again in late October. The slow start initially set CAPS All-Star 4ml9kochb to musing: "It is in the Midwest so hopefully it can just move along slow and steady ...otherwise this is the next Shopko...I did like shopping there while growing up."
Lately, though, Gordmans has taken off like a rocketship, soaring 54% in value since the beginning of November. As fellow All-Star aguadaboca recently pointed out, the stock's been "a lot better performer than [Macy's
Macy's vs. Gordmans
Then again, while Gordmans does compete with Macy's, its target customer is slightly downmarket from there -- more in the line of a Kohl's
And I see no signs it will stop doing so, either. Selling for a mere 13.2 times earnings, Gordmans underprices Kohl's and Target shares (which sell for 15.6 and 15.5 times earnings, respectively). Yet being smaller in size, and operating in markets with less competition, Gordmans looks set to outgrow its larger rivals handily. Consensus expectations on Wall Street call for near-15% annual earnings growth over the next five years, versus 13.4% at Kohl's, and 13% for Target.
Foolish final thought
And so far, so good. Just last week, Gordmans reported its fiscal Q3 2010 earnings results, and the numbers were gangbusters -- an 11% sales increase with 6% comps growth, adjusted (to exclude the effects of the IPO) net income up also 11% year over year, and gross margins rising modestly in comparison to last year as well. Management raised sales guidance for the final quarter of this year, and boosted its earnings estimate by a full 20% (to $0.42 per share).
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Genomic Health is a Motley Fool Rule Breakers selection, but 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. 639 out of more than 170,000 members. The Fool has a disclosure policy.
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