TheStreet.com Ratings: Stock Upgrades, Downgrades
Each weekday, TheStreet.com Ratings updates its ratings on the stocks we cover. Our model projects a stock's total return potential over a 12-month period, including price appreciation and dividends. Our buy, hold or sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While our model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Some recent rating changes are highlighted below.
TheStreet.com Ratings has initiated coverage of Mexican airport operator Grupo Aeroportuario del Pacifico (PAC) with a sell rating. The company's return on equity and rate of net income growth trail the industry average. Gross profit margins fell to 64.4% in the fourth quarter of fiscal 2006, compared with 72% in the same quarter a year ago.
Offshore oil and gas driller Hornbeck (HOS) has been upgraded to buy from hold. The company's return on equity jumped to 17.8% in the fourth quarter of fiscal 2006, more than double what it was in the same quarter a year ago. TheStreet.com Ratings feels this is a clear sign of strength. Hornbeck Offshore had been rated hold since March 2007.
MGI Pharma (MOGN) has been upgraded to hold from sell. The company's products include injections and tablets to treat the side effects of radiation and chemotherapy in cancer patients. MGI trimmed its losses to just 25 cents per share in the fourth quarter of fiscal 2006 compared with $2.19 per share in the same quarter a year ago. TheStreet.com Ratings feels this trend suggests performance of the business is improving. The company had been rated a sell since February 2006.
Discount retailer Dollar General (DG) has been upgraded to buy from hold. The company's stock price has risen 19.9% over the past year. Dollar General's debt-to-equity ratio is just 0.15, suggesting very successful management of debt levels. Although the company has suffered from a pattern of declining earnings per share over past two years, we expect this trend to reverse in the coming 12 months. Dollar General had been rated hold since June 2006.
Asset management firm Brookfield (BAM) has been upgraded to buy from hold. The company's holdings included office buildings, power facilities and timberlands located all over the world. The company's revenues shot up 66.9% in the fourth quarter of fiscal 2006 compared to the same quarter a year ago. The stock has surged 48.4% over the past year, and TheStreet.com Ratings expects it to continue to move higher. Brookfield had been rated a hold since March 2006.
Additional ratings changes are listed in the table below.
|TheStreet.com Ratings Stock Upgrades, Downgrades|
|Company Name||Ticker||Change||New Rating||Former Rating|
|Grupo Aeroportuario del Paci||PAC||Initiation||Sell||n/a|
|Hornbeck Offshore Services||HOS||Upgrade||Buy||Hold|
|Canadian Superior Energy||SNG||Upgrade||Hold||Sell|
|Brookfield Asset Mgmt||BAM||Upgrade||Buy||Hold|
|Source: TheStreet.com Ratings|
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