TheStreet.com Ratings: Stock Upgrades, Downgrades

Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings 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.

Linear and special electric motor manufacturer Harbin Electric(HRBN Quote) has been upgraded to a buy from a hold. The company's revenue growth of 39.3% in the third quarter of fiscal 2006 soared above the industry average of 9.7% during the same period. It enjoyed EPS growth of 26.3% during the third quarter and has a somewhat low debt-to-equity ratio of 0.74. These strengths outweigh the company's net income growth, which has significantly underperformed the industry average. Harbin had been rated a hold since April 2006.

RF Industries(RFIL Quote), a provider of interconnect products and systems for radio frequency communications products, has been downgraded to a hold from a buy. The company produced EPS growth of 425% in the third quarter of 2006 compared with the same quarter a year ago and saw its net income increase by 498.3% during the same period. However, it has shown weak cash flow from operations. RF Industries had been rated a buy since April 2006.