This Just In: Upgrades and 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 here, we won't just tell you what the analysts said. No, we're here to hold Wall Street to account. We're also going to show you whether they know what they're talking about. Helping us in this endeavor will be Motley Fool CAPS, our tool for rating stocks and the analysts who track them. With CAPS, we'll be gauging the long-term performance of Wall Street's best and brightest -- and worst and sorriest, too.

And speaking of the best ...
Just this morning, the equity research arm of credit card powerhouse Capital One Southcoast upgraded the stock of seismic hydrocarbon hunter and Motley Fool Hidden Gems pick Dawson Geophysical (NASDAQ:DWSN) from "hold" to "buy," predicting that the shares will reach $49 per stub within a year. Gee, I wonder whether that change of opinion had anything to do with Dawson's morning announcement that its earnings have doubled?

This certainly looks like an analyst jumping on the bandwagon after it's already begun a wild ride uphill (in defiance of all laws of physics, no less). But perhaps I'm being too cynical. Perhaps Capital One is right in seeing further upside to a stock that, at last report, was already trading a good 13% higher than at the close of trading yesterday. Let's check out CAPS to see how well Capital One's other calls have played out.

Capital One doesn't yet have much of a track record in CAPS. So far, we've got the firm down for just nine picks in all, notably:

See a pattern here? It looks to me like Capital One is developing a specialty in oil stocks. Unfortunately, though, its record to date in this sphere is questionable. Overall, Capital One sports a CAPS rating of just 49.20, putting it almost squarely in the middle of the pack of the nearly 22,000 lay and professional analysts tracked by CAPS. Worse, its accuracy rating (which tells you how often its picks beat or lag the market as predicted) is an unimpressive 44.44% -- meaning the firm is wrong more often than it's right.

On Dawson in particular, whether you say Capital One has been wrong or right depends on your timeframe. Measured from initiation of coverage back in December (with a hold rating) through yesterday's close, Dawson underperformed the S&P by 12%. But thanks to today's superb earnings news, and the resulting surge in stock price, Dawson is almost dead even with the S&P through today's date -- the very epitome of what a "hold" rating is supposed to predict.

But does anyone have a longer, and unequivocally good, track record on Dawson, you ask? Motley Fool Hidden Gems co-lead analyst Bill Mann does. He picked Dawson for our portfolio a good year before Capital One found it, and the stock has generated a 37% return for our members since then (versus a 14% rise in the S&P). Find out what else Bill likes when you try Hidden Gems absolutely free for 30 days.

Who else knows Dawson? At CAPS, the lead scorer on the company isn't an investment bank, or a professional Fool either. To discover the top scorer's identity and thoughts on the company, just click here.

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 40 out of nearly 22,000 raters. The Fool has a disclosure policy.