Thursday, October 22, 2009
Rich Smith :: Townhall.com Columnist
This Just In: Upgrades and Downgrades
by Rich Smith
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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 best ...
Industrial heavyweight Caterpillar (NYSE: CAT) set Wall Street purring with its earnings reportyesterday -- but not everyone's convinced.

Goldman Sachs (NYSE: GS) upgraded the shares and upped its earnings guesses for the company, saying Cat's results portend: "a sharper construction recovery and CAT's cost control has clearly improved, benefiting from aggressive 1Q actions." Yet somehow, rival analyst Stifel Nicolauslooked at the same numbers that Goldman crunched, and came to the opposite conclusion: Cat is a dog. You should sell it.

So who's the savvier equity-veterinarian in this debate?

Let's go to the tape
As I've mentioned several times in the past, Goldman's a puzzler -- and famously disdainful of backseat drivers. The megabanker moved quickly to pay back a government loan (that it never wantedin the first place) earlier this year. In a similar vein, Goldman quickly found that publishing its stock ratings via Briefing.com subjected it to unwanted accountabilityfor its opinions. So while the odd rating (such as Caterpillar) will occasionally slip out in the mainstream press, Goldman hasn't published its ratingsas a matter of course since 2007.

Not so with Stifel, which assiduously posts its opinions on Briefing.com -- and for good reason. Three years of tracking this analyst's performance on Motley Fool CAPS has proven that when it comes to picking winning stocks, Stifel is one of the best in the business.

Famed for its successful (and long-term) picks in the energy sector -- the firm's October 2007 recommendation of Massey Energy (NYSE: MEE) has gained 41%, while its 2006 endorsement of National Oilwell Varco (NYSE: NOV) has nearly doubled the market's returns -- Stifel's also no slouch when it comes to the companies whose products do much of the work getting coal and oil sands out of the ground, and into your gas tank:

Stock

Stifel Says:

CAPS says:

Stifel's Picks Beating S&P By:

Joy Global (Nasdaq: JOYG)

Outperform

****

24 points

Deere (NYSE: DE)

Outperform

*****

17 points (two picks) Continued...

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About The Author

Rich Smith is a business writer with the Motley Fool.

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