At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.
And speaking of the best ...
No sooner had Motley Fool Stock Advisor recommendation CDW (Nasdaq: CDWC) reported its blockbuster sales news this morning -- average daily sales up 22.8% in April, for a total of $621 million, or nearly 29% better than last year -- than pessimist-in-name-only Bear Stearns rushed out an upgrade on the stock. Even though these numbers were boosted by CDW's October acquisition of erstwhile privately held Berbee Information Networks, and even though average daily sales would have been up less without Berbee, Bear Stearns remained impressed.
That's as it should be. We were impressed, too, and so was Mr. Market, which has already bid up CDW's stock 7% on the news. There's no question that CDW's news was good. The question is whether the news was so good that after the run-up, and after the upgrade, the stock is still as good a buy as it was before the news happened, and before Bear belatedly recognized the company's inherent goodness. Simply put, should you trust Bear's opinion that the stock is now a buy?
Well, should you?
The answer to that question depends on your estimation of Bear's stock-picking prowess -- and that's where CAPS can help, by giving you a glimpse of the banker's record.
Unfortunately, that record is no longer anywhere near as good as it was when we first baited the Bear in February. Back then, Bear boasted a CAPS rep in the top 10% of Wall Street stock-pickers and a superb CAPS rating of 99.48. But this Bear's been hibernating ever since, and its CAPS rating has wasted away to a meager 80.48. No longer a "Wall Street's Best" player, Bear today struggles just to maintain the rank of "CAPS All-Star," a title held by more than 5,000 players -- precious few of whom are card-carrying Wall Street bankers.
Turning our attention to a few of the traps Bear set off since February, we find:
| Company |
Bear Says:
|
CAPS Says:
(Out of 5 Stars)
|
Bear's Pick
Lagging S&P By:
|
|
Valero (NYSE: VLO)
|
Underperform
|
*****
|
11 points
|
|
Winthrop Realty Trust (NYSE: FUR)
|
Outperform
|
****
|
9 points
|
|
Cardinal Health (NYSE: CAH)
|
Outperform
|
****
|
8 points
|
|
Procter & Gamble (NYSE: PG)
|
Outperform
|
****
|
7 points
|
Of course, it hasn't all been bad news for Bear:
| Company |
Bear Says:
|
CAPS Says:
|
Bear's Pick Beating S&P By:
|
|
T-3 Energy (Nasdaq: TTES)
|
Outperform
|
****
|
13 points
|
|
OfficeMax (NYSE: OMX)
|
Underperform
|
*
|
14 points
|
I have to admit -- while I'm no card-carrying PETA member, I do feel sorry for Bear. These guys started off with such promise on CAPS, and they've fallen on such hard times that I truly feel their pain. (Literally. Over the past month, my own CAPS score has plunged more than 200 points, losing me nearly 500 places in the rankings!)
Ever the optimist, I hope that Bear can emerge from its funk and become once again the CAPS superstar it was at the beginning. In that regard, I think its endorsement of CDW might mark a step in the right direction.
After all, Tom Gardner's two CDW recommendations have members of Motley Fool Stock Advisor beating the S&P 500 by more than 10 percentage points apiece. Seems to me that Bear could do a lot worse than hitching its wagon to Tom's ever-rising star. (Same goes for you. Claim your free trial subscription now, and see the entire portfolio for no extra charge.)
What else can you get for free? How about a third opinion of CDW? Visit the company's CAPS page, and find out what the No. 1-scoring CAPS player on this stock thinks about its prospects.
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. 505 out of more than 28,000 rated players. The Motley Fool has a disclosure policy.
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