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." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock-pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given this, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't — if that were all we were doing. Fortunately, in "This Just In," we don't simply tell you what the analysts said. We also show you whether they know what they're talking about.

Drinking the Kool-Aid
SodaStream (Nasdaq: SODA) shareholders' cups runneth over. Last week, as you may recall, the company's shares popped 11% on news that they would be partnering with Kraft Foods (NYSE: KFT) to market a line of "Crystal Light" and "Country Time."

At the time, my fellow Fool Rick Munarriz argued that this was, quote, "huge" news for SodaStream. That a "global giant" like Kraft would choose to ally itself with tiny SodaStream, rather than squash it like a bug with a solo entry into the homemade pop market, was surprising — because, as Rick pointed out, SodaStream lacked the patent protection that has forced other big-name consumer goods giants to partner with, for example, Green Mountain Coffee Roasters (Nasdaq: GMCR).

Rick's not alone in this line of thinking, either. Yesterday, ace food products analyst Dougherty & Co. (a long-time fan of Green Mountain) announced that it was initiating coverage of SodaStream with a "buy" rating and a $45 price target. If correct, Dougherty's prediction suggests upside approaching 20% for SodaStream at today's prices. But is Dougherty right about this?

Drunk with power
Fresh from notching back-to-back market "beats" with its twin recommendations of fast-growing Green Mountain, Dougherty now tells investors to expect similar good things from SodaStream. As quoted on StreetInsider.com, Dougherty argues SodaStream is in the midst of "a major distribution expansion in the US, which will fuel strong revenue growth into 2012."

And I don't necessarily disagree. As far as "revenue growth" goes, SodaStream has enjoyed success, roughly doubling its annual sales over the past three years. Problem is, it's not revenue growth that worries me. It's profits.

I don't know about you, but personally, I invest in businesses in the hopes they will earn cash from their endeavors — not just sell increasing quantities of goods with no cash returns to show for it. That's key to why I'm not investing in SodaStream myself, despite the fact that it's an official Motley Fool Rule Breakers recommendation.

Technically "profitable," as GAAP accounting standards define such things, SodaStream has struggled to rack up real cash profits where they matter most: on the cash flow statement. After showing strong free cash flow growth in the 2007‒2009 period, SodaStream slipped into negative territory in 2010, and increased its rate of cash burn in 2011.

Soda & cheese: Two great tastes that taste great together?
This is not a trend I find encouraging. I'm similarly unenthused about the Kraft deal — and I'll tell you why. Rick, Dougherty, and other analysts seem to believe the Kraft deal is some kind of game-changer for SodaStream. But me, I'm not so sure. To me, this looks more like a low-risk gambit Kraft is making — a cheap bet that it might steal a bit of market share from in-store soda sellers Coca-Cola (NYSE: KO) and Pepsico (NYSE: PEP) by riding on the coattails of the fast-growing SodaStream.

Think about it. What is Kraft really risking by doing this deal with SodaStream? Best case, the idea takes off and Kraft gets to market a lot more drink mix to SodaStream fans. Coke and Pepsi find their soda supremacy disrupted, and Kraft becomes a major player in the carbonated beverages market. Worse case ... what? Kraft sells a few more packets of flavored aspartame before the fad dies out? That's about all the downside there is for Kraft in this deal.

Foolish takeaway
But here's the problem in a nutshell: While Kraft is risking very little in allying itself with SodaStream, investors who gamble on the stock's success are making a much riskier bet. They're betting that this company — which burned through $21.6 million in negative free cash flow over the past 12 months — will figure out a way to earn real cash profits to back up its $27.7 million in positive reported income.

Maybe it will, maybe it won't. The only thing I'm sure of is that SodaStream investors are spelling "risk" K-R-A-F-T.