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'll be tracking the long-term performance of Wall Street's best and brightest -- and worst and sorriest, too.

And speaking of the best ...
One of the best stock pickers in the business, American Technology, initiated coverage of defense industry superstar General Dynamics (NYSE:GD) yesterday. Citing an "ongoing recapitalization of the U.S. Army and Marine Corps armored vehicle fleet," General Dynamics' industry-leading position in producing armored vehicles, and continued strength in the firm's civilian sales of Gulfstream jets, AmTech predicted a 16% rise in the shares over the next 12 months, and labeled the stock a "buy."

But is that reason enough for you to do the same?

Let's go to the tape
Actually, yes, it is. You see, among the world of professional stock pickers, AmTech ranks as one of Wall Street's Best, boasting a CAPS rating north of 96, and a record of getting -- better sit down for this -- 89% of its picks right. (Yes, you read that right. AmTech is right nearly nine times out of 10.)

Usually going on record as part of the even more highly rated tag team AmTech/JSA Research, AmTech doesn't have a long record of solo picks. But the record it does have is mighty impressive, including picks like:


AmTech Said:

CAPS Says (out of 5):

AmTech's Pick Beating S&P by:




126 points




83 points

Micron Tech (NYSE:MU)



48 points




12 points

AmTech's not perfect, of course. It did, for example, rate Silicon Image (NASDAQ:SIMG) a buy last year, and has so far lost 68 points on that pick. But overall, this stock picker is a star. When AmTech speaks, investors fail to listen at their peril.

Color me imperiled
Which is why it's only with great trepidation that I break with AmTech on this one. Not because I disagree with its basic investment thesis, mind you. I'm in 100% agreement that U.S. military spending on armored vehicles like the General's Stryker and MRAP offerings will grow over time. I've argued on several occasions that the company is taking the lead in MRAP production, and that it's transforming "rivals" like Force Protection (NASDAQ:FRPT) and BAE Systems into also-rans and subcontractors, mere vassals to the armored overlord.

And yet, I just plain don't see value in General Dynamics' stock, at least not at these prices. The company trades for less than 20 times trailing earnings. Less than 20 times trailing free cash flow, too. But the consensus among Wall Street analysts is that the General can't grow its profits much faster than 11% per year over the next five years, the "ongoing recapitalization of the U.S. Army and Marine Corps armored vehicle fleet" notwithstanding.

That puts the company's PEG much too close to an unreasonably expensive 2.0 for this Fool. As in "2" pricey by far, and "2" rich for my blood.

Of course, some people are willing to pay up for quality and growth. If you're one of them, then take a gander at the trio of defense and aerospace picks we've scoped out at Motley Fool Rule Breakers. The stocks may not be cheap, but trying the service out is ... free.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.