TheStreet.com Ratings: Stock Upgrades, Downgrades - TheStreet

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.

Some recent rating changes are highlighted below.

Adams Respiratory Therapeutics

( ARXT) has been upgraded to a hold from a sell. The company develops and markets over-the-counter and prescription treatments for respiratory disorders. Adams' revenue jumped 74.8% in the second quarter of fiscal 2007 compared with the same quarter a year earlier. The revenue growth appears to have trickled down to the company's bottom line, improving earnings per share during that same time period. Adams has no debt to speak of and appears to be able to cover short-term liquidity needs. The stock had been rated a sell since August 2006.

Semiconductor-equipment manufacturer

Hittite Microwave

(HITT)

has been upgraded to a hold from a sell. The company's products are used in a variety of wired and wireless communications applications. Earnings per share have been growing steadily, and surged 69.6% in the fourth quarter of fiscal 2006 compared with the same quarter a year earlier. Return on equity is currently close to double the industry average. TheStreet.com Ratings feels Hittite's gross profit margin of 73.4% is very high. The company has a debt-to-equity ratio of zero. HITT had been rated a sell since August 2006.

Linear Technology

(LLTC)

has been boosted to a buy from a hold. The company makes integrated circuits for cell phones, notebook computers and high-tech products. Linear's return on equity has risen to 19.8%, well above the semiconductor and semiconductor equipment industry average. Although the stock price has jumped 25.3% in three months, its appreciation has lagged behind that of the S&P 500 over the past year. TheStreet.com Ratings feels this leaves plenty of upside potential for the future. LLTC had been rated a hold since July 2006.

Brazilian electrical utility

CPFL Energia

(CPL) - Get Report

has been upgraded to a buy from a hold. Over the past fiscal year, CPFL's revenue growth rate of 48.3% has outpaced the electrical industry average. The company has a 29.2% return on equity, and net income rose 10.3% in the fourth quarter of fiscal 2006 compared with the same quarter a year earlier. CPFL's stock price has surged 18.2% over the past three months. The company had been rated a hold since June 2006.

Forest City Enterprises

(FCE.A)

has been upgraded to a hold from a sell. The company owns and manages residential and commercial real estate properties throughout the U.S. Earnings per share was up 190% in the fourth quarter of fiscal 2006 compared with the same quarter a year earlier. That growth seems to have contributed to a surge in Forest City's stock price, which has risen 52.8% in the past 12 months. The company had been rated a sell since January 2007.

Additional ratings changes are listed in the table below.