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.

Short everything, part deux
As we learned yesterday, Broadpoint AmTech had a serious case of "the Mondays" this week. No sooner had the broker rolled out of bed yesterday than it downgraded the world. To recap, AmTech took an axe to nearly a dozen of the market's most fabled names, slapping sell ratings on:

  • Blue Nile (NASDAQ:NILE)
  • Dell (NASDAQ:DELL)
  • Garmin (NASDAQ:GRMN)
  • Nokia (NYSE:NOK)

... and yanking its previous buy ratings from:

  • Akamai Tech (NASDAQ:AKAM)
  • Cisco Systems (NASDAQ:CSCO)
  • Marvell
  • Yahoo!

Sell Amazon down the river...
Reviewing the ratings yesterday, I argued that while some of what AmTech said made sense -- selling an overpriced, for example -- the broker's other ratings ran the gamut from sorta logical all the way to downright paranoid. (In particular, the idea of selling Nokia, which currently sells for just 8 times earnings, makes no sense at all.)

... and don't buy Akamai
But there's a lot of news in those tickers up yonder; more than I could cover in a single column yesterday. Today, we're going to look at another pair of stocks from AmTech's hit list. But unlike yesterday, this time, I'm afraid I won't be able to give AmTech the benefit of the doubt on either of its recommendations. The way I see it, the analyst is dead wrong to warn investors away from Akamai and Cisco.

Don't judge a tech stock by its cover
Now, I'll grant that at first glance neither of these stocks exactly screams "buy" at today's prices. Selling for nearly 19 times earnings, Akamai looks a bit overpriced relative to consensus estimates calling for 16% long-term growth. Likewise, Cisco's 12 P/E looks just a tad high in light of 11% growth expectations.

But if you look past the GAAP numbers for a moment, and focus on the firms' free cash flow, the valuation picture turns on its head -- for both stocks:

  • Over the past 12 months, Akamai has generated some $235 million in free cash flow, or nearly 70% more than it reported as net earnings under GAAP. Net out cash and debt, and this gives the stock an enterprise value-to-free cash flow ratio of roughly 9.9, which to me looks dirt cheap relative to the firm's projected growth prospects.
  • Similarly, Cisco boasts $10.4 billion in free cash flow generated over the past 12 months. Net out cash and debt, and the business is selling for barely 7.5 times free cash flow. To my Foolish eye, that offers a comfortable margin of safety in the stock, even if the recession deepens and crimps the growth rate.

Consider too that while the economy looks bleak today, AmTech believes both of these stocks will perform admirably in the eventual recovery. By its own admission, AmTech believes Akamai "is very well positioned ... is going to get stronger in the downturn and is a stock we want to own for the eventual macro recovery." And although the analyst is not convinced Cisco will prosper on the downswing, AmTech does say the Internet backbone-builder "will ultimately recover with the rest of tech."

Foolish takeaway
I would be seriously tempted to buy these sterling tech names now, while expectations are as low as the stock prices.

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Garmin is a Motley Fool Global Gains pick and former Stock Advisor pick. Nokia and Dell are Inside Value selections. Blue Nile and Akamai Technologies are Rule Breakers recommendations. is a Stock Advisor pick.

Fool contributor Rich Smith owns shares of Nokia. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1740 out of more than 125,000 members. The Fool has a disclosure policy.