Stock Upgrades, Downgrades from TheStreet.com Ratings

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 company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

Advance America(AEA Quote), which provides payday cash advance services, has been downgraded to a hold from a buy, as it shows some strengths and some weaknesses. The company posted revenue growth of 11.6% in the second quarter of 2007, compared with the same period last year, and its debt-to-equity ratio of 0.23 is beneath that of the industry average. This shows successful debt management. Net income also increased in the quarter to $14.84 million from $12.90 million in the same period in 2006.

However, the company's stock price has declined 10% from its price level of one year ago, and TheStreet.com Ratings does not see anything in Advance America's numbers that would suggest that the trend will reverse. It had been rated a buy since June 2007.

Online movie rental company Netflix(NFLX Quote) has been downgraded to a hold from a buy. The company shows some strength in multiple areas, including revenue growth of 26.9% in the second quarter of 2007, compared with the same period last year. It has no debt and a quick ratio of 2.26, which demonstrates the ability to cover short-term liquidity needs.