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:


Recent Price

CAPS Rating
(out of 5)

China North East Petroleum (NYSE:NEP)



US Airways 



Continental Airlines



UAL Corp



InterOil (NYSE:IOC)



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.

Jobless recovery? What jobless recovery? Hey, the Dow's still over 10,000, and the Wall Streeters are partying like it's ... 2007. Should you join them?

Survey says: No
Facts are stubborn things, and it's a fact as plain as the nose on your face that Fools disagree with Wall Street this week. Vehemently so. But can you blame them? 

Professional traders appear in need of "professional help" as they make simultaneous schizophrenic bets both in favor of high oil prices (oil sellers China North East Petroleum, InterOil) and against 'em (oil buyers US Airways, Continental, and UAL). In response, CAPS members reply that most of these stocks deserve only one star -- and I bet several of them would score worse than that if we allowed negative star ratings.

And then there's China North East Petroleum.

The bull case for China North East Petroleum
CAPS All-Star greenwave3 thinks the bull thesis on this stock is simple: "China is a net importer of petroleum and there is a lot of room to grow for a self-titled industry consolidator like [China North East Petroleum]. Foreign energy dependence is a pet peeve of the Chinese government, which should help domestic players like [China North East Petroleum]."

Fellow All-Star throwerw calls the company "my favorite stock right now. guaranteed rapidly growing free cash flow with enormous opportunity for expansion priced like a dying company. how could you possibly lose?"

And another All-Star investor, aureo11, believes: "[China North East Petroleum] is seriously undervalued compared to its peers, which is amazing considering that the company has been solidly profitable for the last 3 years and have some of the lowest production costs in the business."

Please explain
To which I reply: OK ... but undervalued how?

According to its SEC filings, the company had some 5.4 million barrels of proven oil reserves to its name as of the end of 2008. The company has an enterprise value of $165 million, so the company is valued at roughly $30.55 per barrel of oil assets. At first glance, this looks roughly in line with what industry flagship ExxonMobil (NYSE:XOM) costs -- buying an interest in the 12 billion barrels of proven reserves there will set you back about $27.71 per share. But when you consider that Exxon also has substantial proven reserves of natural gas -- reserves which China North East Petroleum apparently lacks -- it becomes apparent that Exxon's assets are actually selling for a cheaper valuation.

On the other hand, valued on its earnings, China North East Petroleum sells for a forward P/E ratio of just over five, which is about half what a share of Exxon will set you back, cheaper, too, than BP (NYSE:BP) or Chevron (NYSE:CVX) -- and also cheaper than local rivals like PetroChina (NYSE:PTR) or CNOOC (NYSE:CEO). So viewed from this angle, it looks like aureo11 has a point.

Foolish takeaway
Personally, I'd feel a whole lot more comfortable investing in a century-old going concern like Exxon (and getting paid a tidy dividend) than sinking money into an unknown hole in China -- but that's just me. Other investors may think the disconnect in earnings-based valuations between China North East Petroleum and the oil majors justifies "taking a flyer" on this Chinese upstart.

If you're one of these brave souls, then don't be shy. Speak up! Tell me why I'm wrong to fear China North East Petroleum. Tell the world why NEP is A-OK.