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 ...
On Wednesday, one of our newer acquaintances, a shop by the name of Am Tech/JSA Research, decided to up its rating on tech powerhouse Hewlett-Packard (NYSE:HPQ). In a detailed assessment, the firm laid out its reasoning for raising HP from "neutral" to "buy," beginning with the stock's 6% slide since it last reported earnings, and continuing through the firm's various competitive advantages over archrival Dell (NASDAQ:DELL).

According to Am Tech, Dell's claim to fame -- that it's the low-cost producer of computers -- is turning into a double-edged sword. When your expenses are already cut to the bone, Am Tech reasons, it's hard to find any additional fat to trim. What's more, Am Tech predicts that Dell's costs will rise as it deals with its customer service "issues."

In contrast, Am Tech thinks HP's cost-cutting hasn't yet hit bone, and it sees additional room for margin expansion. It also argues that HP already has the edge on market share, as well as a broader portfolio of PCs, servers, printers, software, and technology services than Dell can offer.

While this all sounds logical, it does fly in the face of other analyst comments that HP's efforts to get lean and mean are just about complete. So what's the story, morning glory -- does Am Tech know what it's talking about? Does HP still have room to run, or is its turnaround ready to turn back down? For clues to this analyst's prescience, we turn to Motley Fool CAPS, where we're tracking Am Tech's calls, to get some insight on its record.

As our returning readers will recall, Am Tech has a superb record on Wall Street. Its CAPS rating has inched up a bit (to 98.53) since last we checked in on the firm. It's still calling things right about two times out of three, and it retains its spot among "Wall Street's Best" stock pickers. Those right calls include:

Of course, even the best stock pickers have bad days. Here are a couple of calls I'll bet Am Tech wishes it had back:

When I look at HP and see a 16.5 price-to-free cash flow ratio attached to a stock expected to grow at just 12% long term, I must admit that I'm less than enthused. Still, considering its track record in tech, I'm hesitant to disagree with Am Tech here. These are not the kinds of smart people you want to be on the wrong side of a trade with.

I'm more willing to disagree with Am Tech's "neutral" assessment of Dell. Endorsed by not one, but two separate and independent Motley Fool newsletters, Inside Value and Stock Advisor -- newsletters whose picks are outperforming the S&P by a good 7% and 40%, respectively, I might add -- Dell looks like a winner to me. (To learn what other stocks are helping our subscribers achieve these kinds of profits, take a free trial to either one -- heck, try 'em both. Free trials are, after all, free.)

And to find out what the very best analysts on CAPS have to say about the two companies, click through to the companies' respective CAPS pages and look up the score leaders' opinions for:

• Dell
• Hewlett-Packard

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 52nd out of well over 25,000 raters. Yahoo! is a Stock Advisor choice. The Fool has a disclosure policy.