TSC Ratings' Updates: NuStar

Shares are down 33.3% on the year, but don't assume that the stock can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, Ecolab is still more expensive than most of the other companies in its industry.

We've upgraded HCC Insurance Holdings(HCC Quote) from hold to buy, driven by its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

HCC's debt-to-equity ratio is very low at 0.2 and is currently below that of the industry average, implying very successful management of debt levels. Revenue fell by 2.8% since the year-ago quarter but outperformed the industry average. Net income decreased by 39.7% to $59.1 million. Return on equity also decreased, but on the basis of ROE, HCC outperforms both the industry and the S&P 500.

EPS declined by 39.3% in the most recent quarter compared with the year-ago quarter. This company has reported somewhat volatile earnings recently, and we feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HCC increased its bottom line by earning $3.38 vs. $2.92 in the prior year, and for the next year, the market is expecting a contraction of 16.7% in earnings to $2.82.

We've upgraded NuStar Energy(NS Quote), which engages in the transportation, terminalling, and storage of crude oil and refined products, from hold to buy, driven by its robust revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue leaped by a very impressive 359.7% since the year-ago quarter, greatly exceeding the industry average of 29% growth. Net income increased by 195.4% to $151.3 million. Outperforming the industry and the S&P 500. Net operating cash flow increased by 415.4% to $203.1 million, and return on equity improved slightly.

NuStar reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year. During the past fiscal year, it reported lower earnings of $2.75 vs. $2.84 in the prior year, but this year, the market expects an improvement in earnings to $4.07.

Other ratings changes include Jos. A Bank Clothiers(JOSB Quote), upgraded from hold to buy, and Foster(FSTR Quote), also upgraded from hold to buy.

All ratings changes generated on Jan. 12 are listed below.

Ticker Company Current Change Previous BAK Braskem SELL Downgrade HOLD BOKF BOK Financial HOLD Downgrade BUY CDGD Cambridge Holdings SELL Downgrade HOLD ECL Ecolab HOLD Downgrade BUY FSTR Foster BUY Upgrade HOLD GBX Greenbrier SELL Downgrade HOLD HCC HCC Insurance BUY Upgrade HOLD HEI.A HEICO BUY Upgrade HOLD JOSB Jos. A Bank Clothiers BUY Upgrade HOLD NS NuStar Energy BUY Upgrade HOLD SCMF Southern Community Financial HOLD Upgrade SELL VCST ViewCast.com HOLD Upgrade SELL

Each business day, 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.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.