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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
Should you buy UPS (NYSE: UPS), or FedEx (NYSE: FDX)? Wall Street wizard Stifel Nicolaus offers an elegantly simple solution this week: Buy them both.

Examining the investment merits of both stocks yesterday, Stifel pronounced FedEx in fine financial health, and argued that the company's ability to quickly "lever up" in an expanding economy by growing its shipping volume is a great reason to own the stock. Yet UPS is not without merit, either. To the contrary, Stifel argues that the recent economic downturn -- and the steps UPS has taken to cut costs to survive it -- have left the company "leaner and meaner" than ever, and ready to rocket out of "the worst margin hole it has faced since the 1997 strike year."

According to the analyst, a purchase of UPS today could easily earn you 20% profits within a year, while FedEx could do even better, producing 24% returns. But is it right about that? Just how savvy a stockpicker is Stifel?

Let's go to the tape
Pretty savvy, as it turns out. According to our records on CAPS, this analyst's predictions land right on the money roughly 57% of the time; the average Stifel pick outperforms the market by better than 9 percentage points. Combined, these two stats put Stifel in the top 5% of investors tracked on CAPS.

So while it's true that Stifel isn't exactly 100% prescient on its transport picks ...

Companies

Stifel Said

CAPS Rating

Stifel's Picks Lagging S&P by

Hub Group

Outperform

***

7 points

Forward Air (Nasdaq: FWRD)

Underperform

***

12 points

... on balance, the analyst's superb record as a stockpicker leads me to believe it's got a point. Plus, Stifel isn't actually laying out a blanket statement in support of "transport companies" in general. While the headline of yesterday's upgrades was certainly bullish enough, the details of the upgrades suggest that Stifel's actually much more optimistic about UPS than FedEx -- and I think it's spot-on.

LTL and the USG
I mean, sure, Stifel loves both companies. But according to the analyst, there are actually two very good reasons to prefer UPS over FedEx. Firstly, Stifel sees a trend toward overcapacity and price competition picking up within the less-than-truckload shipment business, as smaller rivals like Con-way (NYSE: CNW) and YRC Worldwide (Nasdaq: YRCW) struggle to survive the downturn. Given that FedEx draws more of its revenues from this particular stream than does UPS, Stifel sees more risk of margin compression attaching to the former, than to the latter.

And as FedEx contends with "LTL" risk on the one hand, on the other hand it must worry about "USG" -- the U.S. Government. Over in Congress, the move to legislate labor protection to UPS's benefit, and FedEx's bane, is gaining traction. There's rising risk that FedEx will soon find itself subject to regulation under the National Labor Relations Act (NLRA) rather than the existing Federal Railway Labor Act (RLA). If and when that happens, it will become easier for local FedEx offices to unionize, potentially raising both FedEx's cost of doing business, and its risk of that business suffering in the event of a strike.

Consequently, says Stifel: "There are fewer risks to [the bull case for UPS] ... than to that of FedEx, as UPS is not hurt by a union-friendly administration in Washington, and its LTL division (UPS Freight) comprises a much smaller piece of the overall pie, leaving the company mainly exposed to parcel sector trends, which we view as more favorable than LTL at the moment."

Foolish final thought
From a numbers perspective, both FedEx and UPS sell for roughly 16 times next year's earnings (FedEx a little more, UPS a little less.) They're both expected to grow at about 14% going forward (FedEx a little slower, UPS a little faster.) And UPS' stock offers a third, critical advantage over FedEx's -- a dividend payout weighing in at a hefty 2.9%, versus FedEx's miserly 0.5%.

To me, this looks like three strikes against FedEx, three solid wins for UPS.

FedEx is a Motley Fool Stock Advisor choice. United Parcel Service is a Motley Fool Income Investor selection. 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. 414 out of more than 160,000 members. The Motley Fool has a disclosure policy.