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 its worst and sorriest, too.

And speaking of the best...
Just this morning, an upgrade from Robert W. Baird -- and also, coincidentally, a fourth-quarter earnings report that showed profits rocketing 53% year over year -- fired up the stock of oven maker Middleby (NASDAQ:MIDD) for a 12% gain. Said the analyst: "Middleby holds the No. 1 or No. 2 position in nearly all of the product categories in which it competes."

Interesting, but hardly news. Middleby's performance has been evident for quite some time. In fact, the Fool's own co-founder, Tom Gardner, cited the firm's "dominance" in its market niche when he recommended the stock to members of the Motley Fool Hidden Gems back in November 2003 (571% ago, and nearly two years before Baird discovered the stock).

But according to Baird, those gains aren't all that Middleby has in store for investors. Noting that the firm has "new product introductions" forthcoming, Baird sees "significant further growth/margin expansion potential." Is Baird right? Wrong? For clues on the company's prescience, we turn to Motley Fool CAPS to examine its historical performance.

There we see that Baird has attained the rank of CAPS All-Star by the skin of its teeth. Its CAPS rating of 83.14, while respectable, still puts it behind a good 4,000-odd lay and professional investors. Reviewing a few of its more successful picks, we find:

On the flip side, Baird has made a few less impressive calls as well:

So, in a nutshell, here's the good news. Baird has a respectable CAPS rating in general and, in switching over to the bulls' camp on Middleby in particular, finds itself in good company alongside perennial market-thrasher Tom Gardner.

And the bad news? Baird is a tad late to this particular pizza party. Initiating coverage back in August 2005 with a "neutral" rating, Baird encouraged investors to sit on the sidelines, missing a 72% run-up in the stock -- over a period when the S&P rose a mere 17%. That doesn't speak too well to the firm's prescience. But now that it's aligned itself with Tom and the vast majority of CAPS players following Middleby (the stock sports a five-star CAPS rating, and 1,108 out of 1,131 players surveyed expect it to outperform the market), I expect Middleby will heat up Baird's record -- and investors' profits, too.

Other than Tom Gardner and the crew at Hidden Gems, who else knows Middleby well? We've identified the single CAPS analyst with the absolute best record on the stock for you. To find out her (his?) identity, 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 46 out of more than 24,000 raters. Starbucks and BorgWarner are Motley Fool Stock Advisor picks. The Fool has a disclosure policy.