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." Today, we're going to try and show you whether those bigwigs actually know what they're talking about. To help, we've enlisted Motley Fool CAPS to track the long-term performance of Wall Street's best and worst.

On Goldman Sachs, Lipstick, and HOG
Its earnings season, and up on Wall Street the analysts are scurrying to position themselves to profit (or at least to avoid pain) from the news. And so it was that on Friday, Goldman Sachs closed out its short bet against Harley-Davidson (NYSE: HOG).

As reports, Goldman fears that Harley "could be nearing an inflection point on retail sales" (in a good way!). Channel checks lead Goldman to believe that when Harley next reports earnings, it will announce its first sales increase in more than four years -- and with Harley due out with first-quarter earnings on the morrow, Goldman isn't waiting around to get sandbagged. It's closing out its short bet against the stock, and advising investors to adopt a "neutral" stance on the stock for the time being.

But is that the right call?

Let's go to the tape
After all, it's not as if Goldman has a particularly chrome-plated reputation on this stock. Since "elevating" Harley to its absolute lowest rating of "conviction sell" two years ago, Goldman has managed to lose investors a good 40 points worth of market underperformance on its recommendation. It hasn't done much better with its other automotive industry picks, either, outperforming the market by only 10 percentage points on Ford (NYSE: F) (recommended early last year), while under-performing by 19 points on Honda Motor (NYSE: HMC) (likewise.)

So when you consider the hurt Harley has already put on Goldman's portfolio, it's not too surprising that the banker would want to cut its losses now, lest the pain increase tomorrow. As the analyst notes, Harley customers are starting to pay higher prices for "used bike" inventory. This suggests that the years of slashed production have begun to sop up excess supply on the market -- and perhaps set the stage for improved sales of new hogs. If Harley confirms this belief in tomorrow's report, the stock could surge.

Time to buy Harley?
Mind you, at this point Goldman's only hedging its Harley bet, parking the stock as opposed to gunning the gas -- but it's not the only banker out there with an eye for fast bikes. Only hours before Goldman made its ratings tweak, in fact, rival Raymond James came out with an upgrade to "strong buy" on the stock. Like Goldman, Raymond points to "strong results from our recent dealer survey" as lending confidence that tomorrow's numbers will be strong. Furthermore, Raymond sees recent strength at "fun" vehicles makers Polaris (NYSE: PII) and Brunswick (NYSE: BC) (I won't call them "recreational" to avoid the obvious confusion with Winnebago (NYSE: WGO)) as boding well for Harley's results.

Noting the higher forward P/E ratios being assigned to Polaris and Brunswick (and Winnebago, for that matter), Raymond sees every opportunity for Harley to close the gap this week. I agree.

How much is that bike?
Oh, I know: From a pure P/E perspective, Harley still looks pretty pricey. Based on trailing results, the stock's still well north of a 60 P/E, and that doesn't look like much of a bargain considering Wall Street has Harley pegged for just 10% long-term earnings growth.

But consider: Over on its cashflow statement, Harley is showing surprising strength. Free cash flow for the last 12 months is running north of $900 million, giving the stock a tempting price-to-free cash flow ratio of just about 10.0 (not bad for a 10% grower). The company's still heavily indebted, but has begun repaying its creditors, including a whopping $300 million payment to Berkshire Hathaway late last year.

Seems to me, Goldman's making the right move in closing its short bet, because right now, Harley's golden. Here's hoping it can keep the good times rolling tomorrow.