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 ...
I'll give Goldman Sachs this much: They never cease to surprise. Yesterday, the most hated name in banking, and the most feared name in forecasting, caught many a tech investor off guard when it voiced a modestly bullish sentiment on GPS specialist Garmin (Nasdaq: GRMN). Removing its "sell" rating on the stock, Goldman explained that while it's not particularly keen on the GPS market, "our structural concerns ... are now well understood and largely priced in to the shares."

Sure, the market for stand-alone GPS devices "is in secular decline," but now that everyone knows this and accepts it as fact, the danger has been priced into the shares. With the main reason for selling the shares now widely accepted, any good news at all should give the shares permission to rise.

And you know what? I think Goldman's right.

Let's go to the tape
Which is actually a stronger statement than you might think. After all, for all that Goldman enjoys a reputation for stockpicking genius, the facts don't always support the rep. Fact is, Goldman's picks outperform the S&P 500 less than 50% of the time. Worse -- the average Goldman rec actually loses a fraction of a percent to the market's average returns.

Scrolling through our collection of 340-odd Goldman recommendations collected to-date, it appears this analyst is wrong nearly as often as it's right when picking stocks tied (in one way or another) to the GPS industry. Goldman's been right about Apple (Nasdaq: AAPL) and Research In Motion (Nasdaq: RIMM) (whose products can run "apps" produced by Garmin), but wrong about Sprint Nextel (NYSE: S). Right about Garmin partner Ford (NYSE: F); wrong about Honda (NYSE: HMC):

Companies

Goldman Says

CAPS Rating
(out of 5)

Goldman's Picks Beating
(Lagging) S&P by

Ford

Outperform

***

9 points

Research In Motion

Underperform

**

29 points

Apple

Outperform

***

42 points

Companies

Goldman Says

CAPS Says

Goldman's Picks Beating (Lagging) S&P by

Sprint Nextel

Outperform

**

(9 points)

Honda

Outperform

*****

(4 points)

So what makes me think that Goldman will turn out to be right about Garmin itself this time? Call it a mismatch between expectations and reality ...

GPS not R.I.P.
According to Goldman, the market is ascribing "very little value" to Garmin's GPS business right now. Essentially, investors seem to be assuming that, now that everyone from Apple to Nokia to RiM gives you GPS functionality on your cell phone, there's no reason to buy a stand-alone GPS device anymore.

Except, people are still doing just that. Check out the top sellers on Amazon.com (Nasdaq: AMZN), and you'll find that three of the top 10 most popular devices on the site are Garmin-brand GPS devices (they're right behind Amazon's own Kindle device, and various iterations of Apple's iPod in popularity.) What you won't find on that list are GPS devices by TomTom, Magellan, or any other maker but Garmin. Proof positive that despite what the naysayers say ("nay"), consumers are still buying Garmin devices.

Not that you could tell it from the stock price. Selling for only 9.2 times trailing earnings, and paying its shareholders a generous 5.1% dividend for their patience, Garmin shares are being priced for far less than even the modest 5% growth that analysts expect the company to produce. The shares look even cheaper relative to the seven-times-free cash flow valuation hung on this massive cash generator.

Foolish final thought
Discounts to intrinsic value this big don't come along every day, and I doubt very much they're here to stay. According to Goldman Sachs, Garmin's earnings are bound to jump once management concedes defeat in the smartphone wars and stops wasting money on its nuvifone.

But I actually think Garmin will do better than that. To me, cutting the nuvifone will be just the beginning for Garmin. Over time, I expect to see the company spend less and less money producing hardware of any stripe, and focus more and more on producing cutting-edge -- and high margin -- software to run on other companies' hardware. To me, that's where the growth story really takes off. That's the "catalyst" that will reward investors who buy Garmin today.

Fool contributor Rich Smith owns shares of Google. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 599 out of more than 170,000 members. The Motley Fool has a disclosure policy.

Sprint Nextel is a Motley Fool Inside Value selection. Apple, Amazon.com, and Ford Motor are Motley Fool Stock Advisor recommendations. The Fool owns shares of Apple.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.