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 worst ...
Last week, I took a measuring stick to Soleil Securities -- then whacked it over the head with it.
Unkind? Perhaps. But seriously, when 42,700 other investors -- few of whom own their own investment banks -- are picking stocks better than you, you probably deserve a good whack. Boasting a CAPS rating in the bottom 20% of investors, and a record of sub-42% accuracy, Soleil seems destined to end up at the bottom of a whole heap of Wall Street wizards. What's more, I did give the analyst props for making what seems to me to be the right call on Netflix (Nasdaq: NFLX ) . Soleil got that one right once before, and I see every likelihood that it will do so again.
Not so with the pick we'll be discussing today. Today, we're talking Ford (NYSE: F ) , which Soleil upgraded on Monday all the way from "sell" to "buy" -- more than doubling its price target in the process. But Soleil's record in the auto industry shines not nearly as bright as with some of its other old-economy picks. See for yourself:
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Company
|
Soleil Said:
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CAPS Says
(out of 5):
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Soleil's Pick Beating (Lagging) S&P by:
|
|
IBM (NYSE: IBM )
|
Outperform
|
***
|
38 points
|
|
3M (NYSE: MMM )
|
Outperform
|
*****
|
14 points
|
|
Valero (NYSE: VLO )
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Outperform
|
*****
|
(10 points)
|
|
Harley-Davidson
(NYSE: HOG )
|
Outperform
|
**
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(18 points)
|
|
AutoNation (NYSE: AN )
|
Outperform
|
**
|
(32 points)
|
Oh, Soleil has picked a few winners in other "old economy" (is it just me, or does that expression deserve to live on by virtue of its quaintness?) stocks. But the closer it gets to internal combustion engines, the more Soleil gets burnt. The analyst underperforms on Valero (which makes the fuel), Harley (which makes Ford's two-wheeled cousins), and AutoNation (which resells the cars in their golden years). So when Soleil tells us that it thinks Ford is twice as valuable this week as it was last week, you'll pardon me if I take that opinion with a grain of salt.
Sure, Soleil could be right in predicting that Ford's new product launches and its efforts to reduce capacity and cut costs will win over investors this year. But for my money, investors are more likely to see Ford's failure to earn a profit last year, its 12 P/E on earnings expected for 2009, its 9% anticipated earnings growth rate, and say, "Hmm ... I think I would really rather have a Buick. Or even better, a Toyota."
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