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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the worst ...
Well, the trading week has begun -- and with indexes going sideways today, it looks to be off to a rough start. But investors in at least one stock are still cheering, as armored-vehicle maker Force Protection (NASDAQ:FRPT) coasts to its fourth straight day of positive returns. What's the driving force behind, um, Force? Look no further than Wall Street stalwart Merriman (nee Merriman Curhan Ford, the folks who brought you upgrades of both SunPower (NASDAQ:SPWRA) and Geron (NASDAQ:GERN) last year).

Taking a look at Force's business last week, Merriman came away impressed with the strength of the firm's balance sheet, ooh-ing and aah-ing over Force's "$122M in cash" and its "over $300M of A/R and inventory combined, about $100M of which we believe can turn to cash in the next couple of quarters."

Woulda, coulda ... but shouldn't
Fantasizing over the use to which it would put other people's money, had it the opportunity, Merriman wondered aloud what would happen were Force to deploy its cash stash in an effort to buy back, say, 20 million shares. And it answered: Earnings would surge from $0.57 per share in 2011 (and a P/E of 10) to $0.78 per share (and a P/E of just seven). Alternatively, Merriman mused, Force might put its cash to even better use by making an acquisition. Argued the analyst: "Given that the cash is earning practically nothing, it doesn't take much for an acquisition to be accretive."

And yet, I have to wonder whether Force Protection would -- or investors should -- pay any attention to Merriman's musings. Because, when it comes to making good decisions, this analyst's record isn't the finest. As you may recall, last year's recommendations of SunPower and Geron both wound up in the toilet. (Indeed, Merriman made a bad situation worse on SunPower, first upgrading the stock before it tumbled, then downgrading it just before a revival!)

Of course, Merriman's gaffes in the biotech and energy spheres are well-documented:


Merriman Says:

CAPS Says:

Merriman's Picks Lagging S&P By:

First Solar (NASDAQ:FSLR)



83 points (two picks)

Suntech (NYSE:STP)



76 points (two picks)

Gilead Sciences (NASDAQ:GILD)



32 points

In contrast, its record in the defense sector is more limited, if not much better. (Twin picks of TASER (NASDAQ:TASR) have underperformed the market by a combined 44 points.) So if you wonder today why anyone would buy Force Protection on Merriman's say-so, I cannot blame you.

My answer, however, may surprise you: You should buy Force Protection not because of Merriman's upgrade, but in spite of it.

Buy the numbers
You see, in addition to voicing a series of bad ideas about Force's possible future actions, Merriman also -- perhaps accidentally -- put its finger on the real point to remember: Force Protection doesn't have to change a thing to be worth owning today. It's good enough for us if Force just keeps doing what it's doing.

Force didn't wind up with a cash trove of $122 million by accident, after all. It did it by sticking to its knitting: building armored cars, servicing them, and developing and selling upgrades for them. This business has produced nearly $23 million in GAAP profit over the past 12 months, and generated free cash flow of twice that amount at $45 million.

Foolish takeaway
So you see, Force does not even need to buy back shares to get to a "7x earnings multiple." To the contrary, subtract out the firm's net cash from its market cap, and right now, today, the company is already selling for 5.6 times its free cash flow. At this rate, if Force does nothing different from what it's already doing, we could see a stock made up 100% of cash -- with the business thrown in for free -- in less than a half-dozen years. Less, if Force keeps growing at the 20% annual rate that most analysts project for the next five years.

So, far from taking any of the radical moves that Merriman advocates, my advice to Force would be this: You ain't broke. You don't need to be fixed.

First Solar and Suntech Power are Motley Fool Rule Breakers recommendations.

Fool contributor Rich Smith has no position in any of the stocks named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,535 out of more than 145,000 members. The Motley Fool has a disclosure policy.