Shares of XM Satellite Radio ( Nasdaq: XMSR ) climbed higher yesterday after Morgan Stanley upgraded the company to overweight. Usually when I hear about XM putting on a little extra weight, it’s a reference to the 6.5 million subscribers that have gone right to its hips since the service launched a few years ago.

This doesn’t have anything to do with XM putting on a few pounds, although the shares have been pounded by the market over the past year. It’s just the silly language that analysts use to describe something that should be far easier to get across.

Honey, do I look fat in this stock rating?

I’m not a fan of analyst ratings. I understand what firms are trying to get across, but I just have to chuckle when I see a stock that is downgraded from strong buy to buy, or upgraded from strong sell to sell.

Even in the mainstream, the buy, sell, or hold fork in the road has one prong too many. Rating a stock should be a binary process. One or nil. On or off. Buy or sell. There is nothing as ludicrous as a hold suggestion, especially when it’s being dispensed to someone who doesn’t own the stock in the first place.

Our stock newsletters give it to you straight. If it’s an active recommendation, it’s a buy. If things like a shift in fundamentals or wide swings in valuation make the selection unattractive, it gets tagged with a sell recommendation.

That’s the way it should be. Call-in shows should never ask buy, sell, or hold when it’s just a matter of yes or no. Yes, buy it. No, drop it. Here, Morgan Stanley is suggesting that investors overweight their portfolio with XM as opposed to keeping a neutral stance. That may work for mutual fund managers with positions in every stock in the universe, but I just don’t see the value in it for individual investors.

Eat something, please

Ironically, XM has been shedding a whole lot of weight lately. Since the shares peaked at just more than $40 before the 2004 holiday shopping season, it’s been a rocky road down to the high teens.

Making matters worse: As a firm believer in the potential of satellite radio as a disruptive technology, I recommended the shares to Rule Breakers newsletter subscribers this past autumn, figuring that the carnage was over. It wasn’t.

XM and Sirius ( Nasdaq: SIRI ) are amazing companies, but they’re donning some pretty slim gowns these days. Both stocks peaked around the same time, shortly after Howard Stern announced that he was leaving CBS ( NYSE: CBS ) for Sirius, yet both stocks now trade for less than half of their 2004 highs.

That’s not right. Let’s take a closer look at how the companies were doing just before Stern’s announcement sent the shares peaking, and where they stand today.