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 worst and sorriest, too.

And speaking of the worst ...
Early this morning, the stock-picking contrarian indicator of Cowen & Co. upgraded a pair of mobile-phone makers, giving Nokia (NYSE:NOK) and Motorola (NYSE:MOT) the proverbial two thumbs up. According to the analyst, the eternal price war in the cell-phone industry is about to give way to a truce, as handset supplies shift from "excess to shortage, especially in GSM (global system for mobile communications)." Cowen puts the shortage in the "millions of units," and apparently believes that the laws of supply and demand will therefore hand pricing power to the handset makers this year, boosting the stocks. Incidentally, Cowen also expects the joint venture between Sony (NYSE:SNE) and Ericsson (NASDAQ:ERIC); Brightpoint (NASDAQ:CELL); and smartphone maker Research In Motion (NASDAQ:RIMM) to benefit from the newborn trend.

Hold up a sec -- go back to that "contrarian indicator" point
As we discussed earlier this month, Cowen doesn't have a particularly good record of stock picking. With 60% of its picks currently lagging the S&P 500, Cowen carries a CAPS rating of "Under 20" -- which is as bad as it sounds, if not quite bad enough to earn Cowen the dreaded "Wall Street's Worst" icon.

So what can we learn from the stock upgrades of a very bad stock picker? If nothing else, we can look at its logic and see if we can find some flaws. In this case, some of the flaws are so obvious that even Cowen found them:

  • First off, the firm admitted that it does not know exactly why handset supplies are tight -- so the firm appears to be upgrading Nokia and Motorola on a hunch. That might be OK with Nokia, which sells for a pricey, but not super-expensive, 1.4 PEG. But with Motorola carrying a 31 P/E and expected to grow earnings at less than 9% per year over the next five years (which makes for a 3.4 PEG), it seems a bit of a risk.
  • Second, positing that a supply crunch in production of small LCD screens may have caused the handset shortage, Cowen mused -- at the same time it was upgrading the stocks, remember -- that this could make it difficult for Nokia and Motorola to build enough handsets to capitalize on demand. And this is the reason for an upgrade?!

The way I look at it, if you're going to invest on (1) an unexplained shortage in handsets, plus (2) a hunch that a shortage of LCD screens is behind the handset shortage, the smarter way to play this is to invest in the people at the head of the supply chain: LCD glassmaker Corning (NYSE:GLW), which at a PEG of 1, sells for less than either of the handset makers Cowen so favors.

But what do I know. After all, Cowen's the professional, and I'm just a Fool.

Could Corning be the beneficiary of a crunch at the far end of its supply chain? And what other tricks does the high-tech glassmaker have up its sleeve? Take a look at what came out of its recent conference with Wall Street analysts.