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A Big Upgrade for Merrill Lynch

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Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track records of the firms behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 115,000 members, many of whom demonstrate better investing insight than published analysts do.

Enough top-performing CAPS members have given up their bearish ways with Merrill Lynch (NYSE: MER  ) recently to upgrade it from its one-star rank to a more respectable two stars. For those wondering how they could have avoided the financial crash, the ranking system in CAPS has given investors plenty of insight as to where Merrill was headed as far back as 2007. But does the recent upgrade carry the same prescient vision?

No doubt, investors like the familiar and known. And it appears Merrill's agreement to join Bank of America (NYSE: BAC  ) for a mere $50 billion has isolated it from the fear of meltdown that has gripped the market in the wake of AIG's (NYSE: AIG  ) demise. Though Citigroup (NYSE: C  ) has just cemented a deal that would have it assume troubled Wachovia (NYSE: WB  ) , the fate of other banks like Morgan Stanley (NYSE: MS  ) -- and the overall economy -- still hang in the balance.

CAPS investors reacted favorably to CEO John Thain's quick action in taking BofA's offer, avoiding the spectacle of more write-downs that eventually killed Lehman Brothers. But Merrill's shares currently trade more than 15% below the price at which the BofA deal values them. Many investors believe the deal may not happen, or BofA may redefine the terms more to its advantage -- unlike JPMorgan Chase (NYSE: JPM  ) coughing up an extra $8 per share over its original $2-per-share offer for Bear Sterns.

Still, with the current arbitrage built into the price and Merrill's willingness to go quietly, more CAPS members are giving Merrill Lynch the thumbs-up these days. To see what the very best CAPS analysts are saying now about Merrill Lynch -- as well as other winning stocks they are picking -- head on over to CAPS and have a look.

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Fool contributor Dave Mock upgrades the refrigerator with kid art on a near daily basis. He owns no shares of companies mentioned here. JPMorgan Chase and Bank of America are Income Investor recommendations. The Fool's disclosure policy won't eat all the best parts of the trail mix and leave you holding the raisins.

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