This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. Today, our headlines include upgrades for both Con-way and Beazer Homes . But the news isn't all good, so before we get to those two, let's take a quick look at why...

Interactive Intelligence isn't looking so smart today
After seeing their shares double in stock price over the past year, early investors in Interactive Intelligence  were looking pretty smart -- but according to one analyst, they shouldn't let success go to their heads. Calling a top on InIn's run to $50, analysts at Northland Securities announced they're downgrading the stock to "market perform" and rolling back their price target on the stock to $46.

That seems prudent. After all, InIn shares now sell for a lofty 475 times earnings. To put that another way, if profits were to remain at today's levels, and not grow at all, you could buy a share today and not make back your investment for... 475 years. Even with recent medical advances in human lifespan, that seems an imprudent investment plan.


Granted, most analysts do think Interactive Intelligence's profits will grow -- but only at about 15% per year over the next five years. That growth rate moves InIn's share price from the realm of the imprudent, to that of the fantastical.

Honestly, the only question I have for Northland today is why they're stopping at a downgrade to "market perform." At these prices, I'm about as certain as I can be that this stock will in fact underperform the market from here on out.

Can Con-way hit the highway?
I'm more intrigued by our second rating of the day, BB&T Capital's upgrade of trucker Con-way.

BB&T is only upping the stock to hold, from a previous rating of underweight. But with the stock costing 23 times earnings, expected to grow earnings at nearly 19% annually, and paying a 1.1% dividend, Con-way actually looks to me like one of the less egregiously overpriced stocks on the market today. It's also generating positive free cash flow -- a fact not every trucker in the country can claim these days.

That being said, the levels of free cash that Con-way is churning out still remain a bit low for my taste -- about $25 million over the past year, versus reported GAAP net income of $93 million. When you get right down to it, Con-way may be one of the better trucking companies out there, but that still doesn't make it a good stock to buy.

Bummed about Beazer
Sadly, our third stock today is yet another story of disappointment, too-high expectations, and too little opportunity for profit: Beazer Homes.

This morning, analysts at CRT Capital upgraded shares of Beazer to buy, and set a $29 price target on the stock. Try as I might, though, I just don't see how Beazer shares can get there.

The company's not profitable. Beazer lost $146 million over the past 12 months. It's not generating cash. Instead, Beazer burned through nearly $26 million over the same period. Beazer also has a weak balance sheet, burdened with more than $1 billion in net debt. And to top it all off, Beazer isn't even growing all that fast. Analysts have the company pegged for a 4% average growth rate over the next five years.

Sequoias grow faster than that.

Long story short, Beazer is a stock I'd rather be short, than long.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Interactive Intelligence.

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The article Thursday's Top Upgrades (and Downgrades) originally appeared on Fool.com.

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