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.

Wall Street vs. Main Street
Wall Street's i-bankers are buying these stocks just as fast as they can -- and Main Street investors are right there beside them. With the notable exception of Netlist, CAPS members give above-average four- and five-star ratings to each and every stock on this list.

Top honors, however, go to China Marine Food, which enjoys the support of 99% (that's not a misprint) of the CAPS members who've reviewed it. What's got Fools buying this stock in lockstep with each other -- and with Wall Street? Let's find out.

The bull case for China Marine Food Group Limited
CAPS member doctordave77 introduced us to China Marine Food last month as a "Chinese manufacturer and distributor of dried sea food snacks... The products are popular and sell well. It continues to regularly add supermarket and specialty store chains to its customer list..." Viking70 adds: "The Chinese economy will recover regardless of whether or not the US economy does -- China is the up and coming economic superpower." (Does that sound familiar? It should.)

When it comes to growth investing, everyone loves China. But CAPS All-Star IBDvalueinvestin sees another reason to love this stock:

You can't go wrong with food, especially when food production is increasing dramatically to meet demand. Net income is also expected to increase significantly for the 2010 year. A combination of additional sales, stable margins and efficiencies resulting from the Company's recent production line capacity expansion to 20,000 tons per annum is expected to contribute to China Marine's net income guidance of $18.0 million by the end of the fiscal year, 2010.

Chinese growth, American valuation
So, um, dried seafood ... snacks? Yum.

But even if the menu doesn't entice you, the price on this dish just might. Selling for 11 times trailing earnings, consensus estimates call for this company to grow at 31% per year over the next five years. (Albeit, right now this is a consensus of one -- fast-growing Chinese microcaps don't get as much coverage as we might like.) Still, on the surface at least, we seem to be looking here at combination of Baidu-size (NASDAQ:BIDU) growth rates on a stock valued below the P/E of a General Mills (NYSE:GIS). That's a meal fit to tempt any investing palate.

Time to chime in
Granted, I personally do not intend to snack off the China Marine Food sample platter just yet. While the valuation certainly seems appealing, the firm's cash flow statement smells a little fishy to me. (Call me a stock snob, but I'm just not a fan of companies that report GAAP "profit" four times as large as their actual free cash flow.)

But that's just my preference. More adventurous investors may believe that China Marine's cash generation will eventually grow up to match its GAAP earnings. Or they may feel that, with more than $27 million worth of net cash on its balance sheet, China Marine is already sufficiently flush to risk a nibble.

Whichever way you come down on the stock, we've got a place to state your case. Click over to Motley Fool CAPS now, and tell us whether you think China Marine Foods is good eatin'.

Motley Fool CAPS : It's fun, it's free, and it just might make you famous.