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 high-profile ratings moves on Wall Street: a price target hike at Crocs (NAS: CROX) , followed by honest-to-goodness upgrades at American Capital Agency (NAS: AGNC) and Melco Crown Entertainment (NAS: MPEL) .

Crocs marching higher
We begin with a $2, or 10%, hike in target price for Crocs, courtesy of the friendly analysts at Stifel Nicolaus. The higher price target suggests investors in the plastic-clog maker could snag a tidy 23% profit on the stock if they buy today and hold a year, but why?

One possible clue comes courtesy of TheWall Street Journal, which reported in Friday's "CFO Report" that debt-free Crocs is starting to put its cash hoard to work on an international expansion plan. The company aims to open between 25 and 50 stores in Asia over the coming year, and a further 20 to 40 stores in Europe.

Why is this good news? According to S&P Capital IQ, Asia and Europe are Crocs' two most profitable markets, generating operating profit margins of 32% and 24%, respectively -- as compared to the modest 17% margin Crocs earns here at home. For this reason, Crocs' international expansion sounds like good business. And with Crocs stock trading for just 15 times earnings, and growing at an expected 25% per year, the shares look like a pretty good value as well.

American Capital: We're No. 1?
Shifting the focus closer to home, JMP Securities upgraded shares of American Capital Agency to "market outperform" this morning. In addition to the obvious attractions of the near-17% dividend yield, JMP thinks shareholders will enjoy some modest capital appreciation at AmCap, whose shares the analyst predicts will hit $31 within a year. Is JMP right?

Feel free to hope they are, but make sure to bet small. Last week, I described how a slowdown in China's buying of U.S. Treasuries threatens to raise the cost of borrowing for companies like AmCap. The company recently had to cut its dividend payout for the first time in two and a half years, rattling nerves on Wall Street. Higher borrowing costs would mean investors will be waiting even longer before the divvy returns to its former heights. Even more worrisome, additional cuts could be in the cards.

The king is dead. Time to crown a new king
And finally, Melco Crown Entertainment. By now, you've all heard about the troubles that Wynn Resorts (NAS: WYNN) is having with major shareholder Kazuo Okada. He and Steve Wynn are fighting for control of the gambling empire -- but while that's bad news for Wynn shareholders, discord and infighting at a key rival could be very good news indeed for rival Melco Crown.

At Deutsche Bank, they're betting on big gains at Melco, hiking the price target 28% (to $15.60), upgrading the shares to "buy." And Deutsche could be right about this one. With a 35% projected growth rate, Melco is growing faster than any of its rivals in the Macau space. Las Vegas Sands (NYS: LVS) comes closest to pacing it, with 30% annual growth projected for the next five years. Then again, Sands also carries a 35 times earnings price tag, making Melco look like a relative bargain at 24 times. Lower P/E and faster growth? Sounds like a winning combination to me.

But it's not the best stock idea out there. To find out what is, click here and get our free report on The Motley Fool's Top Stock for 2012.

Whose advice should you take -- mine, or that of "professional" analysts like Stifel, JMP, and Deutsche?Check out my track record on Motley Fool CAPS, andcompare it to theirs. Decide for yourself whom to believe.

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 more than 50 separate companies. Check them out on Motley Fool CAPS, where he goes by the handle "TMFDitty" -- and iscurrently ranked No. 391 out of more than 180,000 CAPS members. The Motley Foolhas adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors.

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