The Wall Street Buy List

"Actions speak louder than words." It's an old saying, with more than a grain of truth to it, I'll warrant. So why is it that when the Wall Street firms merely "initiate coverage" or "upgrade" their ratings on a company, that gets all the news coverage? After all, those are only words, when what really matters is how the big boys act. Luckily for Wall Street watchers, it has become relatively easy in this Internet age of ours to find out which professionals put their money where their corporate mouthpieces are. All we have to do is read MSN Money's list of which companies the Street is most actively buying.

But once we've done that, what next? After all, "Monkey see, monkey do" may not make for the soundest of investment strategies. That's where Motley Fool CAPS can help. The Fool's newest venture into the realm of collective intelligence collects ratings from more than 60,000 lay and professional analysts, then overweights the most successful raters' opinions to come up with a "CAPS rating" from one to five stars (five being the best). If Wall Street's buying and the smartest investors in Fooldom say they're right to do so, then that should get your attention.

And so, let's meet today's contenders:

Wall Street vs. Main Street
Main Street couldn't disagree more with Wall Street's favorite stocks this week. Burned by the subprime mortgage fiasco and frightened that more bad news awaits, investors wouldn't touch a financial stock with a 10-foot stock chart right now. Nearly every one of Wall Street's most actively-acquired shares carries a "subprime" CAPS rating; financial stocks especially.

There is one exception, however. Given Allscripts Healthcare's name, investors can be reasonably sure it isn't in the business of extending exploding ARM home loans to unemployed ditchdiggers "earning" an undocumented $1 million per year. This one, CAPS players can live with. But aside from its distance from the mortgage mess, what else do investors like about Allscripts? Let's find out:

The bull case for Allscripts Healthcare Solutions

• FoolishArts introduces us to the company: "AllScripts is one of a number of companies that provide automation services to doctors and healthcare providers. Reducing healthcare costs has become so critical for employers and the government that I believe these services will rapidly expand in the coming months and years. MDRX is solely focused on this market and they have seen a steady flow of small to mid-size healthcare providers sign on for their services."
• PSKTigger1 agrees, and adds: "Medical health records are going to become a necessity, not a luxury, and this is one of the best companies in the field. The alliance with GE (NYSE: GE) shouldn't hurt either."
• Perhaps the most intriguing comment, though, comes from Sandra110, who tips us off that: "Insurance companies are pushing this technology to the MDs as a method of cutting down malpractice incidents."

Why is that last bit important? If you have to ask, chances are you don't work in one of the professions where malpractice insurance is required to practice. Medicine, for one. Law, for another. Basically, the reason boils down to this: If insurers require something, and do so en masse, then an insured professional basically has to accede to the requirement -- or close up shop and find a new profession. If Sandra110 is right about this, it could provide major momentum to Allscripts' sales going forward.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Wall Street's favorite stocks -- or even what our CAPS All-Stars are saying. We also want to hear what you know about the company. Are insurers requiring electronic medical-record-keeping, or is this more a "suggestion?" Does Allscripts have any competitors we need to worry about? (Hint: Yes it does, and we've recommended one of its competitors several times now at Motley Fool Stock Advisor -- take a free, 30-day trial to the service and find out who it is.)

© 2007 Universal Press Syndicate.