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." Here, we'll show you whether those bigwigs actually know what they're talking about. To help, we've enlisted Motley Fool CAPS to track the long-term performance of Wall Street's best and worst.

Power down on Power-One?
 I'm on record naming Power-One (Nasdaq: PWER) as one of the great deep-value bargains of our time. So imagine my shock (and dismay) when yesterday, one of the savviest analysts in the solar industry came out and recommended not buying, not holding, but selling the stock.

That's what happened Monday, when Axiom Capital initiated coverage of this solar inverter manufacturer. Now, because Axiom does not release its ratings for public review on Briefing.com (tsk, tsk), it's currently unrated on CAPS. But we happen to know that Axiom is home to a particularly good solar analyst poached from Hapoalim Securities, the man responsible for the best-performing pick to come out of that latter firm -- a recommendation to sell Suntech Power (NYSE: STP) back in 2008.

Betting on a "Power" outage
As such, the new rating carries some weight. And here's what Axiom has to say about Power-One today: Sales into Italy accounted for "36.5% of PWER's 2010 ... sales." The recent shift in Italian solar subsidies, however, implies a "66%-91%" decline in solar power installations in 2011.

If true, this could wipe out as much as one-third of Power-One's revenue stream this year. And for anyone hoping that other buyers could pick up the slack, Axiom warns that "new inverter capacity coming online in 2011 will take aggregated global capacity to 51.2GW, despite 2011 inverter demand of just 13GW-20GW (a 31.2GW-38.2GW mismatch), implying a period of intensified pricing pressure."

Result: As rival inverter suppliers General Electric (NYSE: GE), Siemens (NYSE: SI), Emerson (NYSE: EMR), ABB (NYSE: ABB), and others (Axiom notes that there are now 360 companies selling into the market, versus "less than 100 just one year ago") vie for share in a shrinking market, profit margins will decline for everyone -- but hurt small, inverter-dependent Power-One much more than its more diversified rivals. Put it all together, and Axiom warns that the rest of Wall Street is significantly overoptimistic about this company's chances, and predicts that within the year, Power-One shares will lose as much as 40% of their value, diving to a target price of $5 per share.

Danger! Horror! Get Out!
 And I'd agree -- but for the fact that Power-One shares have already fallen 30% from their highs of earlier this year. Seems to me, this shows investors are aware of the short-term risks at Power-One but believe long-term rewards are there, too. While I take Axiom's warnings to heart, it seems to me that the dangers here are more than baked into a stock price that now amounts to a mere 8.6 times earnings despite the fact that the company possesses more than $190 million in net cash, generated $182 million in free cash flow last year, and consequently now boasts an enterprise value equal to just four times its annual free cash flow.

Foolish takeaway
Fools, I could be totally wrong about this -- and I do not recommend that you invest real money alongside my virtual bet. But over the years, I've adhered to a system of investing that has rewarded me well -- and I don't intend to abandon it today. When a company like Power-One, which even Axiom admits is "well positioned in the solar inverter market due to its competitive cost position & differentiated product offering," is selling for a price this low, I have to wonder whether the fears are overblown.

Consider: Axiom's concerns notwithstanding, the consensus estimate on this company is still that Power-One will grow earnings 21% per year over the next half-decade. The analyst predicts that this projection will slip as Power-One's perils become apparent on the Street, but how badly must Power-One blow that estimate in order to become "expensive"? Would a slowdown to just 15% growth do the trick, or 10%? I'd argue that even if Power-One slams on the brakes and grows just 5% per year over the next five years, the stock would still be cheap at today's price. For this reason, I'm heading over to Motley Fool CAPS right now to put my reputation on the line and rate the stock an outperformer.

Do you enjoy train wrecks? Can't resist rubbernecking at roadside crashes? Add the stock to your Watchlist, and see how my bet works out.