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.

Xyratex ( XRTX) makes computer storage systems. It has been downgraded to hold from buy. The company has shown a deteriorating net income, disappointing return on equity and poor profit margins. Revenue fell significantly faster than the industry average of 7%.

Since the same quarter a year ago, revenue fell by 26.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. The gross profit margin is rather low; currently at 18.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.90% trails that of the industry average. It had been rated buy since March 2007.

Horizon Lines ( HRZ) is a container shipping and integrated logistics operations company. It has been upgraded to hold from sell. The company has shown solid stock price performance, compelling growth in net income and notable return on equity.

Powered by strong earnings growth and other important driving factors, this stock has surged by 111.78% over the past year, outperforming the S&P 500 index during the same period. The hold rating indicates that TheStreet.com Ratings does not recommend additional investment in this stock despite its gains in the past year. It had been rated sell since October 2006.

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