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 Thursday. Recent price and CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
The market's selling off today, with the Dow down about 3%. But is now the time to panic, or is this your chance to profit? Up above, you see three of the equity names that Wall Street has been buying over the past month -- each one significantly cheaper today than it was yesterday.

And speaking of cheap, flacobob thinks one great reason to own MetroPCS is its "good low cost biz plan. Expanding their coverage. ... Brisk sales in places like MA where cell use is close to 100% People are not seeing any real advantage to stick with the likes of [AT&T (NYSE: T) or Verizon.]"

Similarly with Sprint Nextel, whose all-you-can-eat data coverage is only going to look more attractive in light of AT&T's recent decision to eliminate plans offering unlimited data access.

Plus, according to CAPS member zandi561, Sprint Nextel boasts "Solid cash flows [and a] new 4G phone [that] will bring an increasingly amount of customers back to Sprint."

The arguments sound attractive, but ... so far, it seems few Fools are biting. Neither MetroPCS nor Sprint yet scores in the above-average range on CAPS. But we do have one Wall Street favorite this week that does.

Hypercom
Who is Hypercom? Excellent question. While the stock sports a superb five-star rating on CAPS, it's still flying below many Fools' radar. Not a single substantive pitch has been penned on this stock in more than two years -- so let's see if we can get to know this company a little bit better.

Hypercom is an historical ally of American Express (NYSE: AXP), a maker of debit and credit card "swipe machines" like the ones you use every day when buying lunch, groceries, or summer swimsuits for the kids. As such, the company's intimately connected to, and dependent upon, the same movement toward electronic transactions and "plastic card" use that are bolstering the fortunes of MasterCard (NYSE: MA) and Visa (NYSE: V) -- minus the regulatory revanche that seeks to impose fees on the industry.

Tied into a megatrend this big, Hypercom's stock has outperformed the market handily in recent months, more than tripling in value over the past year prior to getting whacked by a downgrade from Wedbush this morning. Wedbush thinks the run-up is unjustified and leaves the stock looking mighty expensive. But from where I sit, I don't think it is.

I mean, does a 85 P/E ratio look scary? Sure it does. But remember that that P/E ratio only considers reported income under GAAP accounting standards. Dig a little deeper, and you'll find that Hypercom is actually generating quite a bit more cash than its income statement lets on.

I'll bite. How much more?
Over the past 12 months, Hypercom generated nearly $20 million in free cash flow from its business -- nearly six times the amount of reported net income. Valued on this basis, the stock's 14 times multiple to free cash flow doesn't look at all excessive relative to the 25% annual earnings growth that Wall Street projects for Hypercom over the next half decade. To the contrary -- dare I say it? -- even after more than tripling in price over just one year's time, the stock actually looks cheap to me.

Of course, that's just my opinion. Maybe you have a different take on Hypercom? If so, tell us about it here.