Wall Street's Wish List

"Actions speak louder than words." It's an old saying, with more than a grain of truth to it. So when the Wall Street firms merely "initiate coverage" or "upgrade" their ratings on a company, why does that get 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 nearly 19,000 lay and professional analysts, 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, that should get your attention.

Let's meet today's list of contenders:

Chickens and eggs
Another well-worn saw asks us: Which came first, the chicken or the egg? As you've noticed by now, each of these stocks has experienced dramatic price increases over the last 30 days. But are the Wall Streeters buying because the stocks have gone up -- playing the momentum game -- or is their heavy buying causing the prices to spike? It could even be a combination of the two, a vicious circle of some buyers pushing the price up, and others hopping aboard the bandwagon and enjoying the ride.

Kung pao chicken or egg drop soup?
I don't know about you, but the first thing that leaps out at me from the above list is the prevalence of one word: China. Apparently, with China remaining a growth story, Wall Street's Wise Men want to make sure they're invested in that growth (at least in time to publish their end-of-year portfolio statements.)

So is it just Wall Street window-dressing we're seeing here, or is there reason for real optimism? For today's peek into the world of CAPS, let's examine why CAPS players think Wall Street is making the right call on telecom and Internet provider China Netcom:

• All-star CAPS player digilante introduces us to China Netcom, explaining that it's "a fixed line provider in the north of the country. They are a strong contender for a 3G license, but even without the license, the growth in internet usage in China is so high that this company would really have to do a poor job to stunt growth opportunities."
• Fellow all-star MylesPatrick, focusing on the numbers, writes: "you can buy it at only one times revenue, seven times trailing earnings and three times cash flow."
• carstenjansing, ranked in the top 1% of CAPS players, seems to agree with Wall Street's buy-China-anything stance, saying he's "bullish for chinese telecommunication" in general, and will "buy all around for caps." Still, carstenjansing cautions that in a real-money portfolio, "Due diligence& is need[ed]," and suggests that China Mobile (NYSE:CHL) may be an even better pick than China Netcom.

Now it's your turn to tell us what you think on Motley Fool CAPS. You see, on CAPS, it doesn't matter whether your name has a "TMF" in front of it, or a "CFA" after it. Unlike Wall Street, we welcome all comments on CAPS, where the best arguments -- and the best records -- carry the day.

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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 67th out of more than 19,000 raters.