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.

Today's story
We begin today's column on a down note. A report just out of UBS says things are about to get very rough, very soon, for companies trying to sell cars in Europe. According to the banker, the 9.3% decline in new-car sales in May was only the beginning of a long-term slide. European sales are projected to drop 15% to 20% in the second half of this year, followed by two years of nothing but stagnation: A decline of 1% in 2011, followed by an increase of perhaps 1% in 2012.

If you're an investor in any of the major, publicly traded auto companies, this would appear to be bad news indeed. Although it may be America's favorite automaker, Ford (NYSE: F) actually generates roughly a quarter of its annual revenue in Europe. In this, it's less exposed than Daimler (NYSE: DAI), which makes nearly half its money there.

Farther afield, Renault partner Nissan has the greatest exposure to Europe among Japanese automakers, at more than 15%. Toyota (NYSE: TM) drives a bit closer to the curb, deriving barely 11% of its sales from Europe, while Honda (NYSE: HMC) gets the industry's highest market-cap safety rating, at less than 10% Euro exposure. 

So ... this is a "short" column, right?
Actually, no. The Euro pessimism at UBS and other banks notwithstanding, I'm not here to bury the European automotive industry, but to praise it. 

Or more specifically, to highlight the one sparkling facet of the European automotive sector that UBS likes -- auto parts supplier and Motley Fool Stock Advisor recommendation BorgWarner (NYSE: BWA). You see, all the problems in Europe sound like bad news for BorgWarner -- and they are. While individual car companies may make only 10%, 15%, or 25% of their sales in Europe, BorgWarner gets 56% of its revenues from Europe.

Why this is a "long" column
Acknowledging this, UBS concedes that BorgWarner will be affected by those expected declines in European auto sales. But offsetting that is a promise of even bigger riches here at home: Stricter government fuel efficiency standards.

According to UBS, there are basically two (cost-effective) ways to increase fuel efficiency in internal combustion engines. You can equip them with dual-clutch transmissions (DCTs), or add a turbocharger to the engine. And would you care to guess what company is the absolute best play on both these technologies? 

That's right: BorgWarner
Says UBS, BorgWarner commands a 35% share in turbochargers and is the only global supplier of wet DCTs. Consequently, as fuel efficiency requirements take hold in the U.S., UBS predicts, we will see the U.S. markets for these two technologies accelerate. Annual sales of turbochargers alone are expected to grow to a $1.9 billion annual level by 2020, giving a big boost to revenue.

All of which sounds very propitious, I admit. But does it mean now's the time to buy BorgWarner? I'm not so sure.

I mean, from a surface-level perspective, the company does look awfully expensive. The stock sells for nearly 43 times trailing earnings, and nearly 13 times next year's estimates. That's a pretty premium to what you'll find other auto parts makers selling for. I mean, Lear Corp. (NYSE: LEA) shares can be had for less than 11 times next year's earnings, and barely four times trailing results. Dana Holding (NYSE: DAN), while not profitable today, is selling for just 10 times next year's projected profit. Dig a little deeper, though, and the BorgWarner equation gets more interesting.

Foolish final thought
You see, BorgWarner generates significantly better free cash flow than it reports as net earnings, with the result that the company's price-to-free cash flow ratio comes in at 30 times -- not bad relative to the 24% long-term growth in earnings that most analysts expect BorgWarner to post, and perhaps even cheaper if the company grows as fast as UBS is projecting.

Granted, even this possibility isn't enough to attract me to the stock today. Growth is great, but I also want to see a sizeable margin of safety. So personally, I'd like to see the "European automotive meltdown" story get a bit more press and scare down BorgWarner stock to slightly more attractive levels before following UBS's advice, and buying in. But maybe that's just my conservative nature talking.

What do you think? Tell me about it below.

Rich's skepticism notwithstanding, both BorgWarner and Ford remain Motley Fool Stock Advisor recommendations. 

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 428 out of more than 165,000 members. The Motley Fool has a disclosure policy.