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)

Richardson Electronics (NASDAQ:RELL)



Stillwater Mining  (NYSE:SWC)






Nektar Therapeutics (NASDAQ:NKTR)



Cytori Therapeutics (NASDAQ:CYTX)



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.

Party like it's 2009
No doubt about it -- Mr. Market had a bad time last week. As the S&P 500 tumbled toward 10,000, it started to feel like we were back in early 2009. In contrast, Wall Street's money men were acting more like we were in late 2009 -- buying up every piece of junk stock they could lay hands on. I mean -- no offense, folks -- but seriously, what's with all the Taser-, Nektar-, and Cytori-buying going on? Doesn't anybody buy profitable companies anymore?

Actually, yes, they do.

While all five of the companies named up above report themselves to be lacking "profit" under GAAP standards over the past four quarters, two of them actually do generate the kind of cash that Fools love to see -- free cash flow. Not coincidentally, they're also the two stocks with the highest star-ratings: Stillwater Mining, which generated more than $70 million in free cash flow over the last 12 months, and Richardson Electronics, which pulled in an even $11 million (on a much smaller market cap.)

Personally, I'm more interested in the former than the latter (I've watched Stillwater for years). But according to our CAPS members, it's Richardson that's the better buy right now. So deferring to the majority, let's dive right in and find out more about ...

The bull case for Richardson Electronics
Despite giving Richardson a perfect record on CAPS -- 37 votes for outperformance, versus exactly none suggesting the stock will lag the S&P 500 -- investors seem awfully shy about telling us why. To date, a grand total of just two pitches have been penned about the stock:

So OK, a great P/S ratio. I get it. But do the other numbers look as good?

Well, yes, as a matter of fact, they do. One tiny cog in the radio frequency and wireless industry, Richardson doesn't get nearly the amount of investor attention as do bigger players like Broadcom (NASDAQ:BRCM) or RF Micro Devices (NYSE:RFMD) -- but perhaps it should.

The company's balance sheet is so clean you can almost eat off it. Long-term debt of $52.4 million is almost perfectly counterbalanced by $50 million in cash. It's also doing a fine job of generating more cash. For while Richardson may not have much of a P/E just yet, what it does have is a price tag of just 13 times free cash flow.

Last but not least, the company sports a superb record of past growth, and every prospect of more growth to come. Over the past five years, Richardson has grown earnings at an annualized 26.5% clip. Analysts foresee nearly 30% growth next year, dovetailing into a long-term trend of 20% annual growth.

Foolish takeaway
Taken altogether, I believe the numbers laid out above add up to a very nice buy thesis for Richardson: A respectable balance sheet, strong free cash flow, and very attractive valuation. It all looks so good already, that I'm not even going to mention the tidy 1% dividend Richardson pays. That's just icing on an already tasty cake.

So what do you say, Fool? Have I whet your appetite for some Richardson Electronics shares? Take a gander at the stock, then tell us what you think.

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 No. 715 out of more than 145,000 members. The Fool has a disclosure policy.