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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the worst ...
Keefe, Bruyette & Woods just may be "the banker so nice, they named it thrice." While this analyst doesn't enjoy a whole lot of respect on CAPS, I'm looking pretty favorably on its latest stock recommendation.

Yesterday, KBW upgraded shares of Bank of America (NYSE:BAC), arguing that: "[Bank of America] has raised $33.0B of the $33.9B of new Tier one common mandated by SCAP ... [which] takes away a level of uncertainty that kept us from being positive on the shares."

"With ... more clarity on the ultimate share count and thus normalized EPS," KBW thinks it's finally time to reenter the stock.

Pointing out that "normalized earnings" at B of A average $3 per share under the new share count, and that said shares are only fetching about $13 apiece today, KBW finds the resulting 4-something P/E mighty attractive. And honestly, I find it hard to argue with that logic. You rarely get a chance to buy the nation's leading retail bank for a low single-digit multiple like this. But considering how badly burned bank investors got last year when faced with similar numbers, a Fool might ask: Is there any other reason to trust KBW's judgment on this one?

Let's go to the tape
As it turns out, KBW makes a point of "buying what it knows." The banker's primary area of focus in the companies it covers is ... banks. And as you'll see below, KBW does a pretty good job of it:

Company

KBW Currently Says:

CAPS Rating (out of 5)

KBW's Picks Beating S&P By:

Fifth Third Bancorp

Outperform

**

90 points (2 picks)

SunTrust  (NYSE:STI)

Outperform

**

83 points (3 picks)

Marshall & Ilsley  (NYSE:MI)

Underperform

**

76 points (2 picks)

Banco Santander (NYSE:STD)

Outperform

****

33 points

Huntington Bancshares  (NASDAQ:HBAN)

Underperform

**

23 points

No one's perfect, of course, and KBW has made a few mistakes along the way...

Company

KBW Says:

CAPS Rating (out of 5)

KBW's Picks Lagging S&P By:

Wells Fargo (NYSE:WFC)

Underperform

***

21 points

Capitol One (NYSE:COF)

Underperform

*

11 points

... but by and large, KBW does even better on its banking picks than it does picking stocks in general. KBW has 27 open picks on commercial banks as of this moment, according to our tracking in CAPS, and it's beating the market on 58% of 'em. What's more, while the analyst slightly outperforms the market on its recommendations overall, KBW is currently up nearly 1.6% per active pick within the commercial banking sector. In a topsy-turvy market like this one, I'd say that deserves a little respect.

A few caveats, wherefores, and addenda
Mind you, I'm not saying that Bank of America is a "buy." I'm not much of a banking investor myself -- and I know my limitations.

To me, the stock's 15-plus trailing P/E, plus the less-than-8% growth expectations, add up to a "don't buy" recommendation. The company's anemic return on equity both confirms and reinforces that conclusion. And however much "new capital" B of A has acquired to keep the regulators happy, there's still the possibility of more writedowns, as loans already extended go bad.

On the other hand, it's impossible to ignore that the government has reduced interest rates to the point where it's seemingly giving money away. I see every possibility that Geithner & Co. will want to keep this up until the banks have "earned" their way back to profitability (albeit on the taxpayer's dime). Marry this long-term trend to the observations KBW has made about valuation, and I do see some basis for bullishness on B of A.

Bank of America's definitely a gamble. But at this price, it may be a gamble worth taking.

Fool contributor Rich Smith doesn't own shares of any company mentioned. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,042 out of more than 135,000 members. The Motley Fool's disclosure policy performs well in any market.