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.
has been upgraded to a buy from a hold. The company's earnings per share jumped 20% in the first quarter of fiscal 2007 compared with the year-earlier period. TheStreet.com Ratings is expecting more EPS growth in the coming year. The gross profit margin for ChoicePoint is rather high at 52.3%, and the net profit margin of 11.6% compares favorably with the industry average. CPS had been rated a hold since August 2006.
Musical instrument retailer
( GTRC) has also been boosted to a buy from a hold. Revenues shot up 13.5% in the most recent quarter compared with the first quarter of 2006, outpacing the industry average of 4.6% during the same time period. The revenue growth seems to have trickled down to the bottom line, resulting in modest earnings gains during the past fiscal year. TheStreet.com Ratings expects bigger EPS increases in the coming quarters. Guitar Center had been rated a hold since February 2007.
Wheel and tire manufacturer
has been upgraded to a buy from a hold. The company's products can be found on off-highway vehicles used in agriculture and construction. Revenues shot up 23.9% in the first quarter of 2007 over the year-earlier period. Revenues throughout the industry increased just 5.4% during the same time period. Although this growth did not translate into stronger earnings over the past fiscal year, the stock price made significant gains, rising 62.8% in the past 12 months. With analysts forecasting EPS improvements in the coming year, the stock should continue to move higher. Titan International had been rated a hold since December 2006.
Regional air carrier
has been upgraded to a buy from a hold. The company has reported a pattern of positive growth in earnings per share over the past year, and TheStreet.com Ratings expects this trend to continue. Revenues increased 12.9% in the most recent quarter compared with the year-earlier period. Investors seem to have picked up on the positive developments, and have pushed the stock price up nearly 52% in the past 12 months. Even so, Republic Airways still trades at a discount to its peers, with a price-to-earnings ratio of 12.2 versus the airline industry average of 30.4. RJET had been rated a hold since September 2006.
Adams Respiratory Therapeutics
( ARXT) has been upgraded to a hold from a sell. The pharmaceutical company focuses on over-the-counter and prescription treatments of respiratory disorders. The company's revenues were up 10.6% in the third quarter of fiscal 2007 compared with the year-earlier period. The gross profit margin is currently very high, coming in at 72.2%, and Adams Respiratory has a debt-to-equity ratio of zero. ARXT had been rated a sell since May 2007.
Some recent rating changes are highlighted below.
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