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 worst ...
A few months ago, ace stockpicker Stifel Nicolaus suggested that investors dithering between buying UPS (NYSE: UPS) or FedEx (NYSE: FDX) should just go ahead and buy 'em both. I agreed -- to an extent -- saying that while FedEx seemed a mite pricey, UPS was looking mighty fine as a value pick.

Three months later, FedEx is trading lower, UPS higher, and I've been proven right. Unfortunately, not everyone was paying attention. And so it was that yesterday, when stockpicking ne'er-do-well Dahlman Rose initiated coverage on both stocks, it urged investors to buy FedEx and pass on UPS. Here's why they're wrong -- in three easy parts.

Part 1: Valuation matters ... except when we say it doesn't
Justifying its endorsement of FedEx over UPS, Dahlman Rose points first to the fact that FedEx today sells for only 14 times fiscal 2011 earnings estimates, which is significantly cheaper the company's historical average of 19x forward earnings. Fine and dandy. But at the same time as it says this is a reason to buy FedEx, Dahlman dismisses the equally attractive disparity between "usual" valuations on UPS, and what it's selling for today.

While admitting that UPS's 25x average valuation over the past decade offers even more upside from today's 16x multiple than does the FedEx discount, Dahlman argues that because UPS has swung between 16x and 19x in recent years, that's really the right price for it. (Apparently, to the big thinkers at Dahlman, consistency really is the hobgoblin of little minds.)

Part 2: Don't mind the ditch. Keep on truckin'!
Another reason Dahlman likes FedEx's chances is the fact that the company "dominates" the business of shipping less-than-truckload-size loads (LTL) to customers business, holding 12% market share. Again, that's good news, right? Competition is bad, and bigger is better?

Well, sorta. You see, Stifel made a similar point back in May -- but it came to the opposite conclusion. Pointing to growing overcapacity in the LTL market, Stifel wondered whether smaller rivals like Con-way (NYSE: CNW), YRC Worldwide (Nasdaq: YRCW), Arkansas Best (Nasdaq: ABFS), and Old Dominion (Nasdaq: ODFL) might compete with FedEx on price and squeeze profit margins in the process. In which case, the fact that UPS owns a smaller piece of the LTL than does FedEx would actually be a point in UPS's favor.

Part 3: We own the air (or do we?)
Final argument now, and then I'll stop picking on Dahlman for today. According to the analyst, FedEx's "International Priority" business is key to its buy thesis. FedEx earns margins twice as beefy on international shipping as what it gets for making U.S. deliveries. Dahlman likes the fact that FedEx is anteing up to buy fuel-sipping 777's from Boeing (NYSE: BA) to increase its international capacity.

Problem is, Dahlman seems to be missing the fact that while FedEx is preparing itself to accommodate increased international volume, UPS is getting busy capturing the market. As I've described in several articles already, UPS's alliance with China's Alibaba promises to remake the retail world, tying e-commerce sellers in America directly to their suppliers in China (and elsewhere). UPS, being the company that will move goods from Alibaba's suppliers to its customers, serves as the logistical linchpin of this strategy. And with UPS entrenched in the center of this expanding logistical empire, FedEx looks to me like the odd man out. Seeing as even Dahlman acknowledges the superior profit margins of this kind of shipping, I'd think that would increase the odds of UPS outperforming FedEx even more.

Foolish final thought
Admittedly, FedEx's underperformance over the past few months has shifted the valuation picture in its favor. At just under 13 times forward earnings, with long-term growth projected at 12.2%, FedEx's stock does look a bit cheaper than UPS (at closer to 16x earnings at 13% growth). Then again, if UPS's Alibaba business booms as much as I believe it will over the coming decade, the company could surprise analysts by outgrowing even their most optimistic projections.

Factor in UPS's superior dividend payout (3%, or five times FedEx's meager 0.6%), and I believe the balance shifts decidedly in UPS's favor. The fact that Dahlman Rose, spotlighted on Motley Fool CAPS as one of the worst stock pickers on the planet, disagrees with me only makes the case for UPS stronger.

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. 485 out of more than 160,000 members. The Motley Fool has a disclosure policy.

FedEx is a Motley Fool Stock Advisor choice. United Parcel Service is a Motley Fool Income Investor selection.