This Just In: More Upgrades and Downgrades

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." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given this, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't -- if that were all we were doing. Fortunately, in "This Just In," we don't simply tell you what the analysts said. We also show you whether they know what they're talking about.

Today, we're going to take a look at three of Wall Street's new favorite stocks: TiVo (NAS: TIVO) , Akamai Technologies (NAS: AKAM) , and Sirius XM Radio (NAS: SIRI) -- each of which received a shiny new "buy" rating yesterday.

Channeling TiVo
We'll start with TiVo. One of just a handful of companies that's had the good fortune to see its name turned into a verb, TiVo struggled to maintain momentum when rival digital video recorders appeared on the scene from Scientific-Atlanta and Motorola. In recent months, however, TiVo's been on a bit of a winning streak, successfully suing or negotiating multimillion-dollar payments from the likes of AT&T, DISH Network, and EchoStar.

Seeing TiVo (ahem) record so many of these victories in quick succession, the analysts at Barrington now believe the company's legal strategy provides "a path to advancing TiVo's businesses with important relationships with new partners." (Not necessarily willing partners, though. Barrington may be referring to TiVo's continuing litigation against Microsoft and Verizon.) This has Barrington predicting TiVo will soon turn into "a growth story that will resonate with investors," and recommending that its clients buy the stock -- quick: "At current levels, we feel TIVO offers immediate upside."

Me, I'm not so sure. On one hand, TiVo's 22 P/E ratio looks attractive. But to the extent the company's trailing profits depended on one-time, lump-sum litigation payouts, I'm skeptical as to how consistent future earnings growth may be. Indeed, the consensus on Wall Street is that after earning a cool $60 million last year, TiVo will resume losing money as early as 2013.

Olly, olly Akamai!
In contrast to TiVo, Web content deliveryman Akamai has a long history of earning profits for its shareholders -- a long and disappointing history, in which earnings have grown at an average of less than 4% per year over the past five years.

The future looks brighter, though, and most folks on Wall Street predict close to 13% long-term earnings growth at Akamai. That's good enough for boutique investment banker Capstone Investments, which yesterday initiated Akamai at "buy." But it's not good enough for me.

A little over a month ago, I explained why Akamai looked overvalued at a share price of $32, and a P/E ratio of 31. I further explained that the company's decision to shell out $268 million to acquire Israeli rival Cotendo was not a good idea, and made the company's shares look relatively less attractive. Today, not a thing has changed. Akamai still has a similar P/E ratio of 33 and it costs $33 per share and change, having basically sat out the rally we've seen elsewhere in the stock market.

And yes, Akamai's still overpriced.

Buy Sirius? Seriously?
Finally, yesterday we saw Australian investment banker Macquarie venture "Up Over" to recommend buying a Northern Hemisphere firm, Sirius XM.

Macquarie's not exactly a household name here in the U.S., and details on its stock recommendations aren't often covered in the press. Fortunately, I don't think we need to know exactly why Macquarie likes Sirius to conclude that it's right to do so. Sirius is attractive (certainly more so than either TiVo or Akamai) and the reasons for this are clear.

The company sells for 53 times earnings -- a price high enough to scare away a lot of the looky-loos. Those who dig deeper, though, can quickly see that Sirius' 30% projected growth rate and strong record of free cash flow ($381 million over the past 12 months) give this stock a very attractive price-to-free cash flow ratio of 21. Long story short, Sirius may not be quite as big of a bargain as it was when I publicly gave this stock the thumbs-up last year, but the stock still looks to have some upside left in it.

I'd be a buyer, and I've stated so on the record in Motley Fool CAPS. So if you're wondering whose advice to take -- mine, or that of "professional" analysts like Barrington, Capstone, or Macquarie -- you can check out my track record on Motley Fool CAPS and compare it to theirs. Decide for yourself whom to believe.

And if you're looking for even more profitable investing ideas in the world of tech, read the Fool's new -- and free -- report on the industry:"The Next Trillion Dollar Revolution."

At the time thisarticle was published Fool contributorRich Smithdoes not own shares of, nor is he short, any company mentioned above.He does, however, have public recommendations available on 56 separate companies. Check them out on Motley Fool CAPS page, where he goes by the handle "TMFDitty" -- and iscurrently ranked No. 366 out of more than 180,000 CAPS members.The Motley Fool owns shares of Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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