This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include upgrades for both Waste Management (NYSE:WM) and WellPoint (NYSE:ANTM). But the news isn't all good, so let's start off with a few words on ...

Procter & Gamble's mini-downgrade
Procter & Gamble (NYSE:PG) reported earnings yesterday, beating estimates by $0.03 -- which sounds like good news, but if it is, then why are analysts at B. Riley & Co. downgrading the stock to neutral and cutting their price target to $85?

I'll tell you why: Because Procter & Gamble costs too much.

Priced at more than 16 times earnings, P&G shares appear to cost about twice what you'd ordinarily expect to pay for a sub-8% grower. And if the company's generous 3% dividend yield seems to make up some of the difference between "value stock" and "overvalued stock," the fact that P&G generated only $10.7 billion in free cash flow over the past 12 months -- or just 82% of reported net income -- suggests that the stock may, in fact, be more expensive than it looks, rather than less.

While investors can certainly differ over what the numbers mean, and whether Procter & Gamble might be worth owning for the dividend yield alone, one thing is certain: There's enough doubt about the stock's value to justify removing an unqualified "buy" rating on the stock. Riley is right to downgrade it.

Trash or treasure?
The quibbling's only likely to intensify as we shift from bad news to "good." Shares of Waste Management are flying this morning, up 2.5% in the wake of a small earnings miss yesterday -- followed by a big upgrade to "buy" from analysts at Wunderlich Securities.

Wunderlich thinks Waste Management, now selling for $40 and change, is worth at least $43 a share. But me, I think it's overpriced as is. On one hand, yes, WM boasts a better dividend than does Procter & Gamble -- 3.8%. It's also a better cash producer than its $814 million in GAAP "earnings" suggest. Fact is, WM generated a clean $1 billion -- on the nose -- in free cash flow over the past year.

Problem is, that's still only enough to get the stock's valuation down to about 19 times FCF. That's cheaper than the 23 P/E ratio the stock carries, but probably still too high to justify, given that most analysts see WM growing profits at only about 5% per year over the next five years.

Long story short: While a fine company in many respects, Waste Management's stock simply costs too much to buy.

All's well at WellPoint
So are there any good bargains out there? Actually, yes, there is at least one -- and it's the one that analysts at Monness, Crespi, Hardt upgraded to "buy" this morning: WellPoint.

One of America's largest insurers, WellPoint got even bigger in the ways investors like to see yesterday, when it reported $2.94 in Q1 earnings, $0.56 ahead of analyst estimates. Membership roles swelled as well, thanks to the 2012 acquisition of Amerigroup. Topping it all off, WellPoint guided investors to expect $7.80 in full-year earnings for 2013, which was ahead of consensus expectations.

Monness liked these numbers, it seems, and so do I.

Priced at just 9 times earnings today, and an equivalent 9 times forward earnings, WellPoint shares sell for a nice discount to the 12% compound annual earnings growth they're expected to produce over the next five years. The company pays a nice 2.2% dividend yield, too. And if free cash flow looks weak lately, at nearly $2 billion, the FCF number is still strong enough to give this stock a P/FCF ratio of just 11.5 -- a hair below the growth rate, and in combination with the dividend, low enough to justify a buy rating on the stock.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble, Waste Management, and WellPoint and owns shares of Waste Management and WellPoint. The Motley Fool has a disclosure policy.