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.

AnnTaylor Stores ( ANN) is a specialty retailer of women's apparel, shoes and accessories. It has been upgraded to a buy from a hold. The company has no debt to speak of, and has a largely solid financial position. It has reported somewhat volatile earnings recently, but TheStreet.com Ratings believes it is poised for EPS growth in the coming quarters. AnnTaylor's gross profit margin of 55.30% is rather high, although its net profit margin of 5.20% trails the industry average. The company had been rated a hold since August 2007.

Arkansas Best ( ABFS) provides motor carrier transportation services in the U.S. It has been downgraded to a hold from a buy. The company's debt-to-equity level of 0.03 is below that of the industry average, implying that there has been very successful management of debt levels. It also has an adequate quick ratio of 1.20, which illustrates the ability to avoid short-term cash problems.

However, Arkansas Best's revenue declined by 4.4% in the second quarter compared with the same period last year, which has contributed to an earnings decline of 30.98% in the same timeframe, to 78 cents a share from $1.13 per share in the second quarter last year. Its net operating cash flow also decreased 20.19% to $41.30 million during that period. Arkansas Best had been rated a buy since July 2007.

China Petroleum & Chemical ( SNP) operates as an integrated oil and gas, and chemical company in the People's Republic of China and Hong Kong. It has been downgraded to a hold from a buy. The company's revenues increased by 9.8% in the second quarter compared with the same period last year, outpacing the industry average of 3.0%. China Petroleum's return on equity of 23.72% in the second quarter marked an improvement from the same period last year, a clear sign of strength within the corporation.

However, as a counter to these strengths, TheStreet.com Ratings finds that the company has not been very careful in the management of its balance sheet. China Petroleum had been rated a buy since October 2005.

Sypris Solutions ( SYPR) provides outsourced services and specialty products in North America. It has been upgraded to a hold from a sell. The company's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average. Although the company has a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems. The stock price has increased by 15.50% in the last 12 months.

Going forward, TheStreet.com Ratings believes that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market. Sypris' revenue declined by 12.1% in the second quarter compared with the same period last year, which caused EPS to decline to a loss of 13 cents a share from 2 cents a share in the second quarter of 2006. The company also shows a disappointing return on equity and poor profit margins. Sypris had been rated a sell since August 2006.

American Reprographic Company ( ARP) provides business-to-business document management services to the architectural, engineering and construction industries in North America. It has been downgraded to a sell from a hold. Its debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, and the company maintains a quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.

American Reprographics reported an earnings increase of 138.88% in the second quarter compared with the same period last year, although investors do not seem to have paid much attention, as the stock price has declined by 37.70% in the last 12 months.

Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, TheStreet.com Ratings believes that it is too soon to buy. American Reprographics had been rated a hold since August 2006.

Manufacturer and marketer of magazine, newsprint and fine and specialty newspapers worldwide UPM Kymmene ( UPM) has been downgraded to a hold from a buy. The company's revenue increased by 6.1% in the second quarter compared with the same period last year, outpacing the industry average of 3.8%. Its debt-to-equity ratio is 0.60, less than that of the industry average, implying that there has been a relatively successful debt management. Although the company has a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.

Furthermore, the company has not displayed a clear trend in earnings over the past two years, and its losses widened to 51 cents a share in the second quarter from 24 cents per share a year earlier. Even though its stock has decreased by 0.22% in the last 12 months, the stock is still selling for more than most others in its industry. UPM Kymmene had been rated a buy since April 2007.

These ratings changes are listed below.

Stock Upgrades, Downgrades
Company Name Ticker Change New Rating Former Rating
AnnTaylor Stores ANN Upgrade Buy Hold
Arkansas Best ABFS Downgrade Hold Buy
China Petroleum & Chemical SNP Downgrade Hold Buy
Sypris Solutions SYPR Upgrade Hold Sell
American Reprographics ARP Downgrade Sell Hold
UPM-Kymmene UPM Downgrade Hold Buy
Source: TheStreet.com Ratings