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." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given that, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't -- if that were all we were doing. Fortunately, in "This Just In," we don't simply tell you what the analysts said. We 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.

Sterne skewers Skyworks Solutions
It's Friday, and stocks are falling -- few more so than Skyworks Solutions (Nasdaq: SWKS), down nearly 5% as of this writing. We've been writing for some months now about how this particular "pin-action" play on Apple's (Nasdaq: AAPL) iPhone is starting to look wobbly. Reportedly, the company's chip-share in Apple's newest toy is getting nibbled away by smaller rivals such as Avago Technologies (Nasdaq: AVGO) and TriQuint Semiconductor (Nasdaq: TQNT). Investors have generally kept their faith in Skyworks, though, hoping that whatever the fate of the iPhone 5, Skyworks' role in building rival Android devices from Samsung, HTC, and Motorola Mobility (NYSE: MMI) will keep the company stable.

What finally knocked the pin over this morning, though, was a downgrade from Sterne Agee. And for good reason.

Let's go to the tape
Sterne dominates the top of the stock-picking charts at CAPS. It's benefited from such prescient picks as RF Micro Devices (Nasdaq: RFMD) and Cypress Semiconductor, up 6 and 59 points respectively since Sterne picked 'em, in comparison to the S&P 500. In fact, Sterne boasts a reputation as one of Wall Street's best analysts. Nearly 58% of its recommendations beat the market overall, and within the semiconductor industry (ground zero for Skyworks) Sterne is doing even better, outperforming the market on two stock picks for every one it gets wrong.

This should be especially worrisome for Skyworks shareholders today. Because according to Sterne, one of the stocks that Sterne has shown it knows best -- RF Micro -- is responsible for stealing share from Skyworks. Says the analyst, it has "increased competition from RF Micro Devices" (and Avago), which is doing Skyworks in today.

Don't judge a story by its cover
At the risk of repeating myself, this isn't much of a surprise. For years, I've counseled investors to avoid "story stocks" like Skyworks, which depend too much on the popularity of a single trend -- or a single customer -- to fuel their success.

Rather than get sucked into the story, I've urged you to focus on the footnotes -- the dreary, workaday financial statements that companies  include with their earnings releases, which tell you how the business is really going. Problem is, at Skyworks, the story isn't good. Sure, on the surface all seems to be going well. Skyworks shares sell for just 23 times "earnings." That doesn't sound like too much to pay to own a piece of the iPhone, the hottest trend on the planet.

But dig a little deeper, and what do you find? Earnings at Skyworks are only expected to grow about 16% per year over the next five years, giving this stock a 1.4 PEG ratio. Worse, those earnings appear inflated, inasmuch as actual free cash flow at the company amounts to just $147 million annually -- or barely 76% of the company's reported earnings. As a result, Skyworks shares cost nearly 30 times annual free cash flow -- again, on a 16% growth rate ...

Foolish takeaway
Seems to me, even before Sterne pressed the downgrade button on Skyworks, it should have been clear to investors that this stock was overpriced. The saddest thing of all, though, is that there was never any need to invest in the company in order to profit from the iPhone. A better idea then, and a better idea today, is to buy ... Apple itself.

At 16 times earnings, not only does Apple look cheaper (and faster-growing) than bit-player Skyworks. Apple also generates more free cash flow than it reports as net income under GAAP. $23.3 billion in free cash flow annually annually, in fact. And that's enough to drop the firm's' price-to-free-cash-flow ratio down below 14. Pair that valuation with Apple's robust projected 21% growth rate over the next five years, Fools, and you've got yourself a great value story in Apple -- and no reason to own Skyworks at all.

Which stock do you think is the better bargain: Apple-supplier Skyworks or Apple itself? Don't guess. Add 'em both to your Fool Watchlist and find out for sure.

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. 510 out of more than 170,000 members.

The Motley Fool owns shares of Apple and TriQuint Semiconductor. Motley Fool newsletter services have recommended buying shares of Cypress Semiconductor and Apple, and creating a bull call spread position in Apple. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.  The Motley Fool has a disclosure policy.