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

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.

"Ener1 is ener-done"
I paraphrase, of course, but that's basically what Wunderlich Securities told us back in May. Ener1 (Nasdaq: HEV) had just finished reporting a massive quarterly loss, made worse by a nearly-as-massive $59 million writedown of its investment in TH!NK Holdings. With its key customer on the ropes, things were looking bleak. Yet, priced at just a buck and change, and down 50% from what it had cost just two months earlier, Ener1's stock price had many investors convinced that the bad news was already baked in. Few would have imagined Ener1 could fall further. Wunderlich begged to differ … and was right.

Since downgrading Ener1 to sell, Wunderlich has seen its bearish bet pay off in spades. Ener1's stock has fallen nearly 50%, far worse than the rest of the Nasdaq has performed. But now that it's proven a winner, Wunderlich isn't pushing its luck. Noting that Ener1 has just about reached its $1 target price, Wunderlich this morning removed its sell rating from the stock and upgraded it to "hold."

Let's go to the tape
Investors are cheering the upgrade and bidding up HEV stock as of this writing -- as well they might, considering the quality of the investor making the upgrade. After all, when it comes to picking winners in the automotive and energy industries, there are few investors more talented than Wunderlich, which boasts 75% accuracy on its Energy Equipment and Services picks … and 100% accuracy in Auto Components.

Still, the more I look at Ener1, and the more I think about Wunderlich's "upgrade," the more convinced I am that investors are making a mistake today. Yes, Ener1 is selling for around Wunderlich's target price. Yes, a lot of bad news has been baked into the stock's price already. But not all the bad news.

Not by a long shot.

A product in search of a customer
I mean, what does a "hold" rating mean, anyway? It means if you own a stock, you should hold onto it and hope things get better. Call me a pessimist if you like, but I don't think they will. Not for Ener1.

From a business standpoint, the company's a shambles. Laden with a $76 million net-debt load already, Ener1 is burning through cash at the rate of $146 million per year -- which only adds to its debt burden. Unprofitable today, the company's not expected to turn a GAAP profit until 2015 at the earliest. So before buying on today's upgrade, consider: Are you willing to wait four years before seeing a return on your investment?

Sure, some investors hold out the hope of a buyout. A white knight, who will ride to Ener1's rescue, and save investors from their folly. But before entertaining that hope, consider: Who might buy Ener1, and why?

My fellow Fool Travis Hoium recently argued that out of the many, many firms vying for pole position in the electric car battery industry, A123 Systems (Nasdaq: AONE) looks like a survivor. I suppose, then, that it might be capable of buying Ener1 out of its misery. But A123 already has a "major manufacturer" in line to buy its batteries (or so it says), and if that doesn't pan out, there's always Fisker. With a couple of good prospects that already prefer its batteries over Ener1's, why would A123 want to associate itself with a loser technology?

Remember, Ford (NYSE: F) and General Motors (NYSE: GM) have both chosen South Korea's LG Chem as their battery supplier of choice. Ford's also buying from Johnson Controls (NYSE: JCI). Tesla (Nasdaq: TSLA) has a partner in Panasonic (NYSE: PC). What do all these car companies have in common? They've all chosen not to buy from Ener1.


Foolish takeaway
If I were a private-equity kingpin in the market to buy a battery maker, I think I'd take that as a strong hint to avoid Ener1. If you're in the market for a battery maker-stock, you might want to take it to heart as well.