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 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 ...
A new investment banker picked up coverage on Nokia (NYSE:NOK) yesterday, but investors would probably rather Bernstein had just let the call go to voice mail. Citing "slowing demand and possible market share loss," Bernstein recommended that investors sell the stock, calling it a likely underperformer.

Possible?
Right. Just possible. That's the word that jumped out at me from the brief write-up that StreetInsider.com gave to Bernstein's rating. The banker apparently believes that just the possibility of a loss of market share at Nokia is reason enough to sell the stock.

Need I even say it? I disagree. Here's why:

Let's go to the tape
First off, Bernstein isn't exactly the sharpest No. 2 in the analyst pencil case. While the firm gets more picks right than wrong, its 52% record for accurate picks hardly inspires confidence. And Bernstein doesn't make the top 20% of investors tracked by CAPS (our "All-Star" cadre), falling five points short of the mark.

Within the telecom sphere in particular, Bernstein's record appears similarly unspectacular. The firm has picked a few winners ...

... and some losers as well:

But in the end, I'm afraid that Bernstein's guesses in the telecom realm have all the accuracy of a flipped coin -- and with yesterday's diss of Nokia, I think Bernstein's flipped the coin entirely off the table.

Win Bernstein's Money
I'll say it again: I think Bernstein's wrong.

Is Nokia's market share slipping? Maybe. Is a weak economy hurting demand for cell phones? That would be only logical. But thanks in part to these worries, you can now buy Nokia for one of the cheapest valuations we've seen in years.

As of this writing, the stock sells for a mere eight times earnings, and less than 10 times free cash flow. Weighed against the 13% annual growth that most analysts posit for the stock, that's cheap. And when you recall that we're not talking about some cellular also-ran, but the global No. 1 in cell phones, it's ridiculously cheap.

My advice: Ignore Bernstein's worry-warting. Buy Nokia.