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 ...
Is it finally time to buy General Electric (NYSE: GE)? It is if you ask Citigroup. In a research note released yesterday, the megabanker initiated coverage on GE, declaring the "capital crisis has passed" and it's time to buy the stock -- before it rockets to $19 a share.

Now, it would have been nice if Citi had informed us of this happy future a bit earlier; say, in March of '09, when the stock was trading for seven bucks and change. But let's not cry over spilt profits-potential. The question we face now is: Is GE a buy today?

Let's go to the tape
Surprising as it may seem considering the stature of the players involved, Citigroup has not ventured an opinion on General Electric before; at least, not at any time in the four years we've been tracking Citi's performance on CAPS. Still, the analyst has developed a pretty good record on the stocks it has been recommending. On average and over time, 53% of Citi's picks tend to outperform the market, and by a significant -- if not jaw-dropping -- margin of 3.1% per pick.

And that's just the start of the good news for GE bulls. Within GE's home industry of industrial conglomerates, Citi's active recommendations boast 100% accuracy, with the banker racking up big gains on everyone from 3M (NYSE: MMM) to Tomkins plc to Tyco (NYSE: TYC):



Citi Says

CAPS Rating
(out of 5)

Citi's Picks Beating S&P by




63 points




47 points




4 points

As I mentioned last week, Tyco is a personal favorite of mine, second only to Honeywell (NYSE: HON) in the deep value department of the industrial conglomerates superstore. It's growing faster than 3M or United Technologies (NYSE: UTX), and sells for a cheaper price-to-free cash flow ratio than Emerson Electric (NYSE: EMR).

Simplify, simplify
Personally, I prefer Tyco over GE for the simple reason that Tyco's both a great value and an obvious value. Tyco boasts a low stock price, strong free cash flow, and a growth rate that puts most of its rivals to shame. Sure, GE has these attributes as well -- $28.4 billion in trailing free cash flow, 11.4% projected long-term growth ... But I'm not really sure what these numbers mean.

You see, my objection to GE -- even when it looks cheap -- has always been that no matter how good the company looks on the surface, GE's too darn complex to quantify. Is it a stock selling for six times free cash flow? Or is it a business with an enterprise value-to-free cash flow ratio more than three times as large? I just don't know. With a massive in-house financial arm, the company's arguably as much a bank as an industrialist, a fact that makes it difficult to get a handle on its true value.

Embrace the ambivalence
Curiously, though, it's precisely this finance arm that gets Citi so excited about the stock. While tossing a compliment to GE's core industrial business (termed "resilient"), Citi argues that GE Capital alone will "generate 50% earnings growth next year."

Consider this: GE Capital constitutes roughly one-third of GE's business. If that one-third grows 50%, and the other two-thirds of GE do nothing at all, then voila! GE Capital alone secures the 16% earnings growth that Wall Street has GE pegged for next year. It's in the bag.

And remember, that's if the rest of GE stands still. But according to Warren Buffett, the U.S. will avoid a double-dip recession. Calling himself "a huge bull," Buffett informed us yesterday that his industrial businesses at Berkshire Hathaway (NYSE: BRK-B) are going gangbusters, which implies that GE's industrial units will also grow.

Foolish takeaway
How much will they grow? No one knows exactly, but who cares? If Citi is right about GE Capital, then literally any growth at all will suffice to blow Wall Street's best guesses out of the water, producing monster profits in 2011.

Worst case, I suspect that modest growth in the industrials, combined with something less than the 50% GE Capital growth Citi predicts, should still allow GE to meet consensus earnings next year, limiting your downside risk. And with GE finally back on the dividend growth bandwagon, it's increasingly tipping the odds in investors' favor.

How's that for bringing good things to life?