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 125,000-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)

Spartan Motors  (NASDAQ:SPAR)



Eagle Bulk Shipping  (NASDAQ:EGLE)



Smithfield Foods  (NYSE:SFD)



Pennsylvania Real Estate  (NYSE:PEI)



CBL & Associates  (NYSE:CBL)



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
Main Street investors look at Wall Street's fab five this week, and we don't know whether to laugh or cry. Four of the five stocks get average ratings or worse, and the sole recipient of a superior four-star CAPS rating is an Iraq War play (correct me if I'm wrong, but isn't that war supposed to be winding down?)

Whether it is or it isn't, Wall Street seems determined to "remember the Spartans" this week, and Fools tend to agree. To find out why, we turn now to examine ...

The bull case for Spartan Motors
CAPS All-Star Emmerdeur introduced us to Spartan last year as a maker of "MRAP (Mine Resistant Ambush Protected) vehicles for DoD as well as other heavy duty, custom vehicles (fire, emergency services, RV's)." Actually, Spartan's customers here are Department of Defense contractors -- BAE Systems, General Dynamics (NYSE:GD), and Force Protection (NASDAQ:FRPT)

At the time, Emmerdeur saw additional positives in the form of:

No off-balance-sheet debt ... Average annual earnings growth during the past three years has been positive (37.3%) ... Revenue growth during the past three years has been positive (23.3%).

A year later, things have gotten better -- average annual earnings and revenue growth during the past three years comes in at 84% and 39%, respectively. And as recently as September, lamontsf observed that the stock was trading for a "P/E ratio of 3.80! ... Their CEO seems to be steadily buying his own stock, and with the price the way it is, this is a steal."

One of the great things about CAPS is that with 125,000-plus investors, we're bound to have a few contributors who can offer firsthand experience with the companies they recommend. So let's end our series of pro-Spartan pitches with this one from ct2twenty from earlier this year: 

I have been driving a Spartan chassis fire engine for many years now. ... in the fire service, Spartan chassis are consistently thought of as high quality equipment. They are well built and ... hold up extremely well to the rigors of emergency use. When we spec new apparatus, we immediately 'pen in' Spartan. ... I have heard many times here to invest in what you know. I know this is a quality product, that has always been competitively priced compared to others in the industry. I know that the company delivers on time. The managers we deal with are knowledgeable and efficient.

High praise indeed. But seeing as we're talking motor vehicles here, I have to ask: How much is it gonna cost me to own this stock?

Turns out, Spartan's even cheaper than when lamontsf spotlighted it back in September -- at least, at first glance. The stock currently fetches just 3.3 times trailing earnings. And if you think that's cheap, then get a load of this: Analysts expect the company to grow those earnings at an average rate of 46% per year over the next five years.

So what's the catch?
If you're thinking that all of this sounds too good to be true, well, you may be right. So here's the catch: Yes, Spartan looks profitable under GAAP -- wildly, incredibly profitable, and looking more so with each passing quarter. However, the firm hasn't generated a penny of cash profit since 2005, and is in fact free cash flow-negative over the past five years.

Time to chime in
Something about this situation doesn't add up, folks, and for my part, I won't buy into a situation that I don't understand. But that doesn't mean that you should miss out, if you see something I'm missing.

So what do you think, Fools? Is Spartan as good as it looks on the surface, or is this story just too good to be true? Click on over to Motley Fool CAPS and cast your vote.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool PRO team will accept new subscribers to their real-money portfolio service. Motley Fool PRO is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool PRO and to receive a private invitation to join, simply enter your email address in the box below.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.