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Ratings Changes: Hershey, Novartis

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking total return performance.

BOSTON ( TheStreet) -- TheStreet.com's stock-rating model downgraded Crown Castle International (CCI - Get Report), which leases telecommunications towers, to "sell."

The numbers: While second-quarter revenue increased 8% to $409 million, Crown Castle swung to a net loss of $111 million, or 41 cents per share, from a year-earlier profit of $60 million, or 19 cents. The company was hindered by $110 million of quarterly interest expenses. Its operating margin increased from 19% to 26%, but its net margin fell into negative territory. A quick ratio of 0.8 and a debt-to-equity ratio of 2 demonstrate weak liquidity and excessive leverage. We give Crown Castle a financial strength score of 2.9 out of 10.

The stock: Crown Castle has gained 65% this year, beating major U.S. indices. We consider the stock, which doesn't pay dividends, an unattractive investment.

The model upgraded chocolate manufacturer Hershey (HSY - Get Report) to "buy."

The numbers: Second-quarter revenue rose 6% to $1.2 billion as earnings jumped 72% to $71 million, or 31 cents. Its operating margin increased from 12% to 14% and its net margin climbed from 4% to 6%. Just $28 million of cash reserves and a quick ratio of 0.3 indicate a weak liquidity position. A debt-to-equity ratio of 3.9 indicates a capital structure skewed toward debt. Still, Hershey has remained profitable during every quarter of the recession and has a steady revenue stream, which helps compensate for a weak balance sheet.

The stock: Hershey has advanced 15% this year, outpacing the Dow Jones Industrial Average and S&P 500 Index. The stock trades at an expensive price-to-earnings ratio of 25, but offers an attractive 3% dividend yield.

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SYM TRADE IT LAST %CHG
CCI $85.00 -1.10%
GEF $39.73 0.46%
IMO $44.82 0.56%
HSY $93.70 -0.98%
NVS $103.93 -0.34%

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DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

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