This Just In: Upgrades and Downgrades

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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 ...
Analyst-watchers have been treated to a spate of new opinions on tech stocks over the past week, as a "new" voice begins to make itself heard on Briefing.com. On Oct. 3 (or thereabouts), venerable British banker Barclays Capital began submitting its opinions to the ratings aggregator -- and as such, revealed itself to CAPS as well. Here's what we know about Barclays.

Who it is
Barclays Capital has been in business for a little over a decade now, and operates as a subsidiary of Barclays plc, the $38 billion British megabank.

What it says
Over the past three trading days, Barclays has been so active that it's already earned itself a (tentative) CAPS rating. While the sample size is small, and the banker's score therefore likely to be erratic, Barclays has made a name for itself by wading right into the debate on a number of high-profile names:

Company	Barclays Said:	CAPS Says:	Barclays' Pick Beating (Lagging) S&P by:
Apache (NYSE: APA)	Outperform	*****	7 points
General Electric (NYSE: GE)	Outperform	****	7 points
Anadarko (NYSE: APC)	Outperform	****	6 points
Apple (Nasdaq: AAPL)	Outperform	****	1 point

So as you can see, Barclays is off to a strong start. The banker's getting 54% of its picks right out of the gate, and currently ranks in the second quintile of investors tracked by CAPS, with a CAPS rating of 70.71. Not bad for a newbie. But does Barclays have the skills to go the distance?

Today's news
This morning, Barclays made a couple bearish bets on the tech sector, downgrading both IBM (NYSE: IBM) and EMC (NYSE: EMC) to "Equal Weight," while cutting its estimates for Cisco (Nasdaq: CSCO). And yet, if you listen carefully, you may be surprised by the tone of Barclays' "downgrades."

• On IBM: "We believe IBM's management team has done a very good job improving the company's growth profile and we acknowledge its recurring profit streams, but we believe it is prudent to acknowledge risks presented by the economy."
• On EMC: "We believe EMC has attractive cash and can take share." That said, Barclays sees the "potential for weakness in the storage market in Q4 and beyond, particularly within financial services." (And who would know better than a banker?)
• Similarly, on Cisco, Barclays frets over: "a deepening situation in financials and a possible spread to other verticals."

And I have to say that I agree with just about everything Barclays is saying -- except for its conclusions, which smack of the absurd. Basically, Barclays is telling us that these three companies are all class acts. Yet the banker expects a slowing economy to hold their performance to no better than that of the rest of the market?

Foolish takeaway
Sorry, Barclays, but that doesn't make a whole lot of sense to me. From where I sit, each of these companies looks downright attractive. The most expensive of the bunch, IBM, sells for a PEG ratio of about 1.1 -- hardly exorbitant for a globe-striding giant of the tech sphere. Similarly stellar EMC and Cisco both still look cheaper based on their P/Es. And when you consider that all three companies generate massively greater cash profits than they report as net income, I can't help but find them cheap.

No. Check that. Dirt cheap. Thanks to the global meltdown in equities, investors now have the opportunity to own three stars of the sphere, IBM, EMC, and Cisco, and pay less than 1 times their price-to-free cash flow-to-growth ratios for the privilege. So my advice: Don't be fooled (small "f") by Barclays' cognitively dissonant musings of this morning.

And don't miss your chance to buy these tech giants at today's discount prices.