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.

Emulex

(ELX)

, which provides a range of advanced storage networking infrastructure solutions, has been upgraded to a buy from a hold. The company's revenue grew by 27.7% in the fourth quarter of fiscal 2007 compared with the same period last year, outpacing the industry average of 2.9%. It has no debt to speak of, a relatively favorable sign, and the company maintains a quick ratio of 4.82, which demonstrates the ability to cover short-term cash needs.

Emulex swung to a profit of $13.16 million in the fourth quarter from a loss of $4.79 million in the final quarter of fiscal 2006. The company has reported somewhat volatile earnings recently, but TheStreet.com Ratings feels it is poised for earnings-per-share growth in the coming year. Emulex had been rated a hold since October 2005.

Home improvement retailer

Home Depot

(HD) - Get Report

has been downgraded to a hold from a buy. The company's net operating cash flow increased by 59.65% to $2.14 billion in the second quarter compared with the same period last year, and its debt-to-equity ratio of 0.43 is below the industry average, implying that there has been successful management of debt levels.

Still, Home Depot's quick ratio of 0.30 demonstrates a lack of ability to pay short-term obligations. Earnings fell by 6.1% in the second quarter compared with the same period last year, continuing a one-year pattern of EPS decline. The company's stock price has fallen by 11.77% in the last 12 months. Home Depot had been rated a buy since October 2005.

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Mentor Graphics

(MENT)

, which makes electronic design automation systems, has been upgraded to a buy from a hold. The company has demonstrated a pattern of positive EPS growth over the past two years. Mentor swung to a profit of $1.91 million in the second quarter compared with a loss of $450,000 in the same period last year. Despite a revenue increase of 15.3% over the same timeframe, this growth trailed the industry average of 18.2%. These strengths outweigh the company's weak operating cash flow. Mentor Graphics had been rated a buy since May 2007.

Cohen & Steers

(CNS) - Get Report

, which manages high-income equity portfolios, has been upgraded to a buy from a hold. The company's revenue increased by 64.5% in the second quarter compared with the same period last year, exceeding the industry average of 29.8%. Cohen & Steers' return on equity reached 27.51% at the close of the second quarter, up from 9.72% in the same period last year. This is a signal of significant strength within the corporation.

Its gross profit margin of 41.90% is considered strong, and its net profit margin of 26.90% has significantly outperformed the industry average. Net income swung to a profit of $18.62 million in the second quarter from a loss of $37.82 million in the same period last year. Cohen & Steers had been rated a hold since July 2007.

Plains Exploration & Production

(PXP)

, an oil and gas exploration and production company, has been upgraded to a buy from a hold. Net income swung to a profit of $25.32 million in the second quarter compared with a loss of $7.13 million in the same period last year. The company's stock price has increased by 17.34% in the last 12 months, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust.

While it goes without saying that even the best stocks can fall in an overall down market, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. These strengths outweigh the company's generally poor debt management. It had been rated a hold since August 2007.

Additional ratings changes are listed below: