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

TheStreet.com Ratings has initiated coverage of mattress maker

Sealy

(ZZ)

with a sell rating. The company reported just a 7.2% increase in net income in the first quarter of fiscal 2007 compared with the same quarter a year earlier. Sealy stock currently trades at about the same price level it did a year ago, possibly due to relatively flat earnings growth during that time period.

Chinese search engine

Baidu.com

(BIDU) - Get Baidu, Inc. Sponsored ADR Class A Report

has been upgraded to a hold from a sell. The company's revenue shot up nearly 111% in the first quarter of fiscal 2007 compared with the year-earlier period. Earnings per share jumped 191% during that same time period. The company has no debt to speak of and seems to have the ability to cover short-term cash needs. Baidu.com had been rated a sell since September 2006.

Philadelphia-based banking firm

TheStreet Recommends

Sovereign

( SOV) has been downgraded to a hold from a buy. The company's earnings have tumbled 75.1%, falling to just 9 cents per share in the first quarter of fiscal 2007 from 36 cents per share in the first quarter of the previous year. Sovereign Bancorp's return on equity is currently just 0.4%, much lower than the thrift and mortgage finance industry average of 10.4%. SOV had been rated a buy since May 2005.

Scientific Games

(SGMS) - Get Scientific Games Corporation Report

has been upgraded to a buy from a hold. The company designs and services hardware and software for gaming applications, including lotteries and horse racing. The company's revenue and earnings per share were both up in the first quarter of fiscal 2007 compared to the same quarter a year ago. TheStreet.com considers Scientific Games' 42.5% gross profit margin to be strong. SGMS had been rated a hold since November 2006.

Consumer goods manufacturer

Clorox

(CLX) - Get Clorox Company Report

has been upgraded to a buy from a hold. In addition to bleach, the company's products include everything from trash bags to salad dressings. TheStreet.com is impressed with some of Clorox's latest offerings, such as additions to the Armor All/STP car care line and a hand sanitizer spray.

The company also has the opportunity to grow market share and cut costs thanks to the acquisition of Colgate-Palmolive's bleach businesses in Canada and Latin America. Those factors, plus solid financials and rising earnings over the past fiscal year, make Clorox look like a good bet in the future. CLX had been rated a hold since May 2005.

Some recent rating changes are highlighted below.