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 ...
As they say, all good things must come to an end. And as the markets begin to shake off the droplets of red ink rained down by yesterday's cloudburst, one stock in particular is sitting out the recovery: Amazon.com (Nasdaq: AMZN). Of course, this is after Amazon defied bearish sentiment yesterday and, buoyed by an upgrade to "buy" from Citigroup, soared nearly 4% in price.

Citing a "general consolidation in the share price" (whatever that means), but also praising the company for possessing "one of the best fundamental outlooks" among e-commerce sites, Citi argued that Amazon's triple-digit runup last year is only the beginning. Citi believes that Amazon will continue to steal market share from e-commerce rivals in its core business, while developing additional revenue streams in downloadable digital media. But does Citi know whereof it speaks?

Let's go to the tape
Actually, yes, it does. Ranked in the top 10% of investors on CAPS, Citi has racked up an impressive record of calling winners in the Internet space:

Company

Citi Said:

CAPS Says:

Citi's Pick
Beating S&P by:

Omniture (Nasdaq: OMTR)

Outperform

****

87 points

Baidu.com (Nasdaq: BIDU)

Outperform

***

77 points

Google (Nasdaq: GOOG)

Outperform

***

42 points

And while it has collected a few failures along the way ...

Company

Citi Said:

CAPS Says:

Citi's Pick
Lagging S&P by:

Netflix (Nasdaq: NFLX)

Underperform

**

37 points

Blue Nile (Nasdaq: NILE)

Outperform

**

12 points

Titanium Metals (NYSE: TIE)

Outperform

*****

11 points

... overall, Citi's wins greatly outweigh its losses. And that's key to the firm's ranking on CAPS. The banker gets nearly as many calls wrong as right, and depends on the quality of its right-guesses eclipsing its losers.

Citi's making a very tough call this time, declaring Amazon a winner, and I have to say that the odds look to be stacked against it. From almost any valuation perspective you choose, the firm looks overpriced:

  • Its price-to-sales ratio is nearly three times the industry average.
  • The triple-digit trailing P/E looks similarly steep when weighed against 23% projected annual profits growth.
  • The forward P/E of 59 and price-to-free cash flow ratio of 50 aren't much more encouraging.

What's more, the last time Citi weighed in on Amazon, telling investors to sell in January 2007, investors who heeded the advice suffered 33 points of market underperformance before the banker pulled its sell rating in April. Hardly encouraging.

Foolish takeaway
I've got no quarrel with the bulk of Citi's arguments in favor of Amazon. It is the premier e-tailer. It does have a slew of potential new revenue opportunities, any one of which could turn out to be the wild card that keeps Amazon in full flood into the future. But at this price, the stock just plain costs too much, and carries too much downside risk.

Fools of a feather rarely fly together. At Motley Fool Stock Advisor, legendary growth-stock investor David Gardner still has a place in his portfolio for Amazon.com -- even after the stock has run up nearly 500% in value since he recommended it five years ago. But would he actually buy more at today's price? Take a free trial to the newsletter and find out.

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. 2,028 out of more than 79,000 players. The Fool has a disclosure policy.