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 worst ...
I've got good news and bad news for Johnson & Johnson (NYSE:JNJ) investors today. Good news first: Your stock just got upgraded to "outperform." And the bad news?

It's Wachovia that did the upgrading.

Wachovia who?
Huh? I get the joke. True, Wachovia no longer exists as an independent bank (Wells Fargo (NYSE:WFC) bought it in December.) But the "Wachovia Securities" name lives on as a sub-sub-subsidiary of its new owner. More importantly, the analyst's record lives on in CAPS, where -- until formally digested, renamed, and merged into its new owner's brokerage department -- we can still give you a pretty accurate picture of how good a job Wachovia Securities does of picking winners.

Which is to say: not well. (But also, not always. More on that in a moment.)

Let's go to the tape
Over the two-plus years that we've been tracking Wachovia's recommendations on CAPS, this analyst has garnered the reputation of an exceedingly mediocre stockpicker. As of right now, 53% of the time Wachovia picks a stock, it underperforms the market. Wachovia's had the devil's own time picking winners in the oil patch, for example:

Stock

Wachovia says:

CAPS says:

Wachovia's Pick Lagging S&P By:

Chesapeake Energy 
(NYSE:CHK)

Outperform

*****

10 points (2 calls)

Weatherford International 
(NYSE:WFT)

Outperform

*****

18 points

Williams Companies

Outperform

****

12 points

And yet, the one sector of the market where Wachovia does do well is pharma:

Stock

Wachovia says:

CAPS says:

Wachovia's Pick Beating S&P By:

Procter & Gamble 
(NYSE:PG)

Outperform

*****

18 points

Teva Pharmaceutical 
(NASDAQ:TEVA)

Outperform

*****

28 points

Gilead Sciences 
(NASDAQ:GILD)

Outperform

****

35 points

And if you're looking for a place to hang your hat on Wachovia's Johnson & Johnson recommendation, I think this is where you need to look. Against a generally abysmal record for accuracy, Wachovia does at least seem capable of picking winners in the medical sphere. Will J&J prove one of them?

Short answer: It might
Let me admit right at the start that Johnson & Johnson is not the kind of stock I would ordinarily pick for my own portfolio. The consensus from analysts is for long-term growth of only 8% for Johnson & Johnson. Wachovia thinks the company can achieve nearly 9% annual profits growth on a 5% acceleration of sales. Either number, though, looks too low to justify the stock's apparently valuation of 11.6 times earnings and 12.2 times free cash flow -- at least, the way I usually look at these things, it does.

And yet, a case can be made that the company's strong 3.5% dividend, and the fact that the company pays out only 39% of its earnings to fund that dividend (suggesting the ability to increase it) makes up for the lack of double-digit growth.

It's also worth pointing out that the stock's trading cheaper today than ... well, it's pretty much cheaper than it's ever been before. Reviewing the company's metrics over the past 15 years, it appears you might have been able to get the stock cheaper last year -- but you'd have had to have moved quick. And overall, Johnson & Johnson shares have averaged a P/E ratio closer to 24 over the past 16 years. This suggests that today's price offers a sizeable discount to what investors will eventually be willing to pay to own a piece of this firm's profits.

Foolish takeaway
I reiterate: Johnson & Johnson is not the kind of stock I would ordinarily call cheap; it's not cheap by my usual metrics. But when Wachovia says the stock's a bargain, it's got good reason to do so -- several reasons, in fact.

Investors looking for a company that consistently achieves strong double-digit returns on capital, pays a respectable dividend, and is selling for a valuation touching multiyear lows should give Johnson & Johnson a good, hard look.

Click on over to Motley Fool CAPS now, and tell us what you think.

Chesapeake Energy is a Motley Fool Inside Value recommendation. Johnson & Johnson and Procter & Gamble are Income Investor recommendations and the Fool owns shares of the latter.

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 No. 262 out of more than 130,000 members. The Fool has a disclosure policy.