This Just In: Upgrades and Downgrades

• Email
• Share
• Print

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 ...
They're ba-ack. One week to the day after we profiled "Wall Street's Best" icon-holder Jefferies for its initiation of coverage on Motley Fool Stock Advisor recommendation Silicon Labs (Nasdaq: SLAB), out came the analyst this morning with a buy rating on Motley Fool Rule Breakers pick Suntech Power (NYSE: STP).

Maybe it's time we create a new icon on CAPS? "Honorary Fool," perhaps? Or maybe "Better late than never?" After all, while Jefferies has just climbed on board at Suntech, here at the Fool we've already racked up 20 points worth of market outperformance on the stock over its 15 months' time in our portfolio.

Which is not to say that Jefferies cribs all its ideas from our Foolish analysts, or can't pick stocks on its own. Reviewing the analyst's record on CAPS, we find it's done right nicely with its recommendations on:

Company	Jefferies Said:	CAPS Says:	Jefferies' Pick Beating S&P by:
Tenet Healthcare  (NYSE: THC)	Underperform	*	52 points
MGM Mirage  (NYSE: MGM)	Outperform	***	45 points

Neither of which is an active recommendation in any of our newsletters. But then again, we never made the mistake of recommending:

Company	Jefferies Said:	CAPS Says:	Jefferies' Pick Lagging S&P by:
Nortel (NYSE: NT)	Outperform	*	46 points
Micron (NYSE: MU)	Outperform	**	21 points

In recommending Suntech, Jefferies cited Suntech's skill in low-cost manufacturing, "conversion efficiency gains," and "history of exceeding production estimates," as all contributing to its ability to outperform its solar power industry rivals. Matching actions to words, when Jefferies initiated coverage of one of those rivals today, it rated Sunpower (Nasdaq: SPWR) only a "hold."

Seeing as I agree with Jefferies on Suntech, I'd add just one more point: Suntech sports a trailing P/E of 51, to Sunpower's lofty 360 multiple to earnings. Meanwhile, the consensus of the analysts tracking both stocks is that Suntech will grow faster than the higher-priced Sunpower (41% per year, versus 37%). All the more reason to favor Suntech over Sunpower, I say.

And what do the people who really know this stock say? Take a free, 30-day trial to Motley Fool Rule Breakers and find out why they think that, of all the solar power stocks in the world, Suntech shines brightest.