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.

Office products retailer Office Depot(ODP Quote) has been downgraded to hold. Despite a challenging environment, the company bolstered its top-line by introducing new offerings and services designed to attract new customers and strengthen its relationships with existing customers. However, higher energy and construction costs and the slowdown in the housing market have eaten into Office Depot's profits. Also, new store openings may cannibalize the existing business to some extent. Last month, the company said second-quarter earnings slipped 8% from a year earlier to $109.1 million, or 40 cents a share. Sales totaled $3.63 billion, up from $3.49 billion a year ago. Office Depot had been rated buy since August 2005.

Rockwood Holdings(ROC Quote), a specialty chemicals company, has been upgraded to buy. The company has enjoyed revenue growth, expanding profit margins, good cash flow from operations, a solid stock price performance and a notable return on equity. These strengths should outweigh Rockwood's sub-par growth in net income. In July, the company said second-quarter profit slipped 25% to $28 million, or 37 cents a share, due mostly to special costs and charges. Adjusted earnings totaled 51 cents a share. Revenue increased 10% to $850.7 million. The company said it is on track to achieve its target of 5% to 6% growth in sales. Rockwood Holdings was initiated with a sell rating in September 2006.