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 worst and sorriest, too.

And speaking of the best ...
I usually speak of "the best" in a general, forgiving sense -- the same sense, I suspect, that convinces the Wall Street bankers that they are indeed better stock pickers than the rest of us (despite all evidence to the contrary). Every once in a while, however, one of the firms that truly deserves the title "Wall Street's Best" comes along and publishes a stock recommendation. That happened this morning, when American Technology downgraded the shares of graphics chip maker and Motley Fool Stock Advisor recommendation NVIDIA (NASDAQ:NVDA).

How low can you go?
Spinal Tap may be able to "go to 11," but they've got nothing on AmTech, which dropped NVIDIA all the way to "sell" this morning -- a rare event on Wall Street. Concerned over increased competition from AMD (NYSE:AMD) in the gaming chips space, AmTech argues that NVIDIA's growth rate crested several months ago, and that the company is already in a downturn. AMD is usually considered Intel's (NASDAQ:INTC) archrival, but ever since AMD bought ATI last year, it's been NVIDIA's as well. But is AmTech correctly gauging the competitive dynamics within this, well, dynamic industry? For a clue to the firm's stock-picking prowess, we turn once more to check its CAPS score.

Let's go to the tape
What we find there is that, while it's not looking quite as stellar as it did just a few weeks ago (when it was getting nine picks out of 10 correct), AmTech remains one of the best analysts in the business, with a CAPS rating in the low 90s and accuracy in the low 60s. AmTech's active picks include:

Impressed yet? No? Then consider one final recommendation that AmTech has made -- that of NVIDIA itself. In September 2006, AmTech recommended that investors buy the shares. Since then, the firm has outperformed the S&P 500 by a whopping 82 percentage points.

So yeah, I'd say these guys know a thing or two about NVIDIA. Between AmTech's record and NVIDIA's nosebleed valuation (the shares carry a PEG of nearly 2.0 even after the recent sell-off), this is one sell recommendation you should seriously consider following.