This Just In: Upgrades & Downgrades

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 worst and sorriest, too.

And speaking of the best ...
Early this morning, Banc of America Securities upgraded the stock of semiconductor equipment maker Applied Materials (NASDAQ:AMAT) from "neutral" to "buy" -- but not for the reason you think. No, B of A isn't predicting a revival of the chip industry, either industrywide or with respect to the supply side that Applied Materials occupies.

Rather, these analysts are "banc-ing" on Applied Materials' investment in the burgeoning field of solar power paying off in spades. (Read all about the firm's move into the solar space here.) Said B of A: Applied's "foray into the solar power equipment market is now accelerating faster than our previous estimates or management's recent guidance." B of A projects that Applied's solar-related sales will exceed its predictions by at least twice this year, and continue rocketing up to as much as four times guidance -- or $2 billion per year -- by 2010.

Ordinarily, I'm skeptical when bankers substitute their own judgment for that of the people who actually run the business. But as regular readers of this column know, B of A's stock-picking star is on the rise. Debuting in our Feb. 9 edition with a respectable CAPS rating of 96.39, B of A's rating had risen to 97.91 just two weeks later. Checking in on CAPS to see how it's doing lately, we find that B of A is now up to a stellar CAPS rating of 98.98, securing it a place among "Wall Street's Best" stock pickers.

Its victories to date include:

Of course, even the mighty stumble from time to time. B of A's blooper reel includes:

Losing money on unpopular, one-star picks (you did notice that I was focusing on its less popular recommendations, didn't you?) is hardly difficult. And yes, B of A sometimes stumbles when crossing the crowd. It's trickier, however, to go against the grain, recommend intensely unloved stocks, and make a killing -- yet that's just what B of A has done, time and time again.

Considering its record to date, I can't help but wonder whether B of A's recommendation of a "chip stock" today -- for reasons entirely unrelated to chips -- will do the same. (If you've got an opinion on the matter, don't be shy. Drop by CAPS and tell us whether you think B of A is just chasing snarks here, or perhaps sees something that the rest of the market doesn't.)

Who else enjoys going against the grain, betting big, and getting in early on the growth stories of the next decade? The gang at Motley Fool Rule Breakers, that's who. And wouldn't you know it -- they've found a solar energy company of their own, which just might outperform Applied Materials. Learn who it is, and see all the rest of our market-beating picks, when you claim your free one-month trial to the service.

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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 126 out of nearly 26,000 raters. The Fool has a disclosure policy.