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The following ratings changes were generated on July 10.
, which operates a chain of neighborhood retail discount stores, was upgraded to buy. The basis of the upgrade is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover.
The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow. In the latest quarterly results, revenue slightly increased by 2.9% from the same period last year--underperforming the industry average of 8.6% revenue growth. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. Net income increased to $64.67 million from $60.37 million it earned in the same quarter last year, an increase of 7.1%.