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Stock Upgrades, Downgrades from TheStreet.com Ratings

Performance Food, Lear upgraded; Great Plains, Cousins Properties downgraded; First Solar initiated.

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. The following ratings changes were made on Feb. 14.

Performance Food

(PFGC) - Get Performance Food Group Company Report

, a food distributor, has been upgraded to buy. The company's strengths, which include solid stock price performance and reasonable valuation levels, outweigh low profit margins.

Fueled by strong earnings growth, the stock's rise over the past year has outperformed the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential. For the third quarter of 2007, Performance Food posted year-over-year EPS growth of 31%. Net income rose $12.04 million to $16.04 million during the same period. With a price-to-earnings ratio (P/E) of 22.93, the stock is cheaper than others in its industry. Performance Food had been rated hold since Aug. 6.

Lear

(LEA) - Get Lear Corporation Report

, a maker of car parts, has been upgraded to hold. The company exhibits impressive EPS and revenue growth as well as notable return on equity. However, Lear shows poor debt management, weak profit margins and a disappointing stock price performance.

For the fourth quarter, the company announced a profit of $27 million, or 34 cents a share, vs. a loss of $645 million, or $8.90 a share in 2006. We expect a trend of EPS growth to continue. Return on equity greatly increased year over year and exceeds the industry average, a signal of significant strength within the corporation.

Lear's gross profit margin is currently extremely low, coming in at 8.4%. Its net profit margin of 0.7% trails the industry average. Lear's debt-to-equity ratio is very high at 2.25, implying poor management of debt levels. The company maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems. Lear had been rated sell since Jan. 15.

Great Plains

TheStreet Recommends

(GXP)

, an energy company, has been downgraded to hold. The company's strengths include robust revenue growth, growth in earnings per share and compelling growth in net income. Weaknesses include disappointing stock performance.In the fourth quarter, Great Plains posted 23% year-over-year revenue growth. This revenue increase contributed to profit of $48.1 million, or 56 cents a share, vs. $37 million, or 45 cents a share a year ago. We feel that EPS growth should continue. GXP has underperformed the S&P 500 Index, declining 15% over the past year. Such a decline is not necessarily a negative; it could make the stock attractive down the road. Right now, however, it is too soon to buy.

Cousins Properties

(CUZ) - Get Cousins Properties Incorporated Report

, a real estate investment trust, has been downgraded to sell. The company shows deteriorating net income, weak debt management, disappointing return on equity, poor profit margins and unsatisfying stock price performance.

For the fourth quarter, the company swung to a loss of $1.2 million, or 10 cents a share, vs. a profit of $41.9 million, or 10 cents a share, a year ago. Cousins' debt-to-equity ratio of 1.22 is higher than the industry average. Return on equity has greatly decreased year over year, a signal of major weakness. At 6.5% Cousins Properties' gross profit margin is low. The net profit margin of -2.7% significantly lags the industry average.

Shares have fallen 33% over the past year. In one sense, the sharp decline last year is a positive, making it cheaper. Due to other concerns, however, the stock is still not a good buy right now.

First Solar

(FSLR) - Get First Solar, Inc. Report

, a maker of solar power modules, has been initiated with a hold rating. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth and a solid financial position. However, as a counter to these strengths, the stock trades at a premium valuation.

For the fourth quarter, net income grew 542% to $62.9 million. This stock has surged over the past year, outperforming the S&P 500. First Solar's impressive revenue growth greatly exceeded the industry average. Year over year, revenue grew to $200.8 million from $52.7 million. The company's debt-to-equity ratio is very low at 0.10, implying successful management of debt levels. With a quick ratio of 3.71, First Solar can cover short-term cash needs. However, at 14.43%, the company's return on equity is below that of the industry average. Its P/E is 114.23, which makes it far more expensive than other stocks in its sector.

Additional ratings changes from Feb. 14 are listed below.

Ticker

Company Name

Change

New Rating

Former Rating

ACY

AEROCENTURY CORP

Downgrade

Hold

Buy

CHIC

CHARLOTTE RUSSE HOLDING INC

Upgrade

Buy

Hold

CUZ

COUSINS PROPERTIES INC

Downgrade

Sell

Hold

HRH

HILB ROGAL & HOBBS CO

Downgrade

Hold

Buy

GXP

GREAT PLAINS ENERGY INC

Downgrade

Hold

Buy

LEA

LEAR CORP

Upgrade

Hold

Sell

PFGC

PERFORMANCE FOOD GROUP CO

Upgrade

Buy

Hold

RCMT

RCM TECHNOLOGIES INC

Downgrade

Hold

Buy

RGEN

REPLIGEN CORP

Downgrade

Hold

Buy

RBCAA

REPUBLIC BANCORP INC/KY

Upgrade

Buy

Hold

UTR

UNITRIN INC

Downgrade

Hold

Buy

WABC

WESTAMERICA BANCORPORATION

Upgrade

Buy

Hold

WF

WOORI FINANCE HOLDINGS CO

Upgrade

Hold

Sell

EQ

EMBARQ CORP

Upgrade

Hold

Sell

FSLR

FIRST SOLAR INC

Initiated

Hold

ALLT

ALLOT COMMUNICATIONS LTD

Initiated

Sell

NMX

NYMEX HOLDINGS INC

Downgrade

Sell

Hold

This article was written by a staff member of TheStreet.com Ratings.