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 worst …
Oh, how the mighty have fallen, and how low the Crisis has laid the heads of the Wall Street Wise. Just one year ago, Citigroup ranked among the best stock pickers on the Street. But a series of disastrous bearish bets on the consumer-led recession ...

... has laid waste Citi's reputation over the course of a few short months. Today, Citi ranks in the bottom 20% of investors tracked by CAPS, its reputation stained with an anemic rate of 47% accuracy on its picks, and dogged by the humbling statistic: The average Citi pick lags the returns of the humble S&P 500 index.

Not even successful, recession-resistant picks like Wal-Mart (NYSE:WMT) and UST (NYSE:UST) -- up a dozen percent and a half-percent, respectively -- have sufficed to salvage Citi's rep as one of the smartest cookies in Wall Street's oven.

Nor will this one
And so now, here comes Citi pulling its previous buy rating on Amazon (NASDAQ:AMZN) -- behind the curve once again. When Citi recommended selling Amazon in January of last year, that call cost investors as much as 33 points of market underperformance. Spinning on a dime to recommend buying the stock in January of this year, Citi proved the perils of market timing -- handing investors a 13-point loser.

Today, Citi warns: As investor sentiment on Amazon waxes positive, "consumer spend datapoints have become consistently more negative." And while Citi considers the stock "a Core Holding – given its management team, market opportunity, business model, and competitive position," the banker fears future "market share losses or a materially greater than expected Recession hit."

Foolish takeaway
To sum up, on the one hand, Citi says Amazon is a company you want to own forever. On the other, Citi's record shows that it hasn't a clue when exactly is the right time to start owning Amazon. So let me suggest a time for you:

Now.

Consider the numbers. Over the past 12 months, Amazon.com has generated a simply astounding amount of free cash flow -- $970 million in total. That works out to a price-to-free cash flow ratio of just 22. Yet, consensus estimates predict Amazon will keep on growing its profits at a 25%-per-year pace over the next half-decade. To my mind, this offers a proverbial "good price" on an indisputable "great company." At today's price, I'd be a buyer.