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. EarthLink ( ELNK) provides Internet Protocol access and communications to consumers and businesses. It has been upgraded to a hold from a sell. The company's debt-to-equity ratio of 0.62 is somewhat low overall, but is high when compared to the industry average, and its quick ratio of 1.96 is high and demonstrates strong liquidity. However, Earthlink's revenue dropped by 6.0% in the second quarter compared with the same period last year. In that same quarter, EarthLink swung to a loss of $16.29 million from a profit of $16.57 million a year earlier. Its stock price is down by 3.17% over the last 12 months. EarthLink had been rated a sell since June 2007.
GSI Group ( GSIG) supplies precision technology components, lasers and laser-based manufacturing systems to the electronics, semiconductor, medical and aerospace industries. It has been upgraded to a buy from a hold. The company has no debt to speak of, a relatively favorable sign. GSI's earnings declined by 46.7% in the second quarter over the year-earlier period, and the company has not demonstrated a clear trend in earnings over the past two years. Nevertheless, its stock price has increased by 12.99% in the last 12 months, and TheStreet.com Ratings believes the stock still has good upside potential. GSI Group had been rated a hold since October 2005. Through its subsidiaries, M.D.C. Holdings ( MDC) builds and finances homes in the U.S. It has been downgraded to a sell from a hold. M.D.C. swung to a loss of $2.32 per share in the second quarter of 2007 from a gain of $1.66 per share a year earlier. Earnings have declined over the past two years, a trend that should continue in the coming year. The company's stock price is down 19.71% in the last 12 months, and while it's now selling for less than others in its industry in relation to its current earnings, this doesn't justify a buy rating. M.D.C. Holdings had been rated a hold since March 2007. Schmitt Industries ( SMIT) designs, markets and distributes electronics for machine tool products and laser management systems. It has been downgraded to a hold from a buy. Schmitt's performance has been mixed. The company has a debt-to-equity ratio of zero, a relatively favorable sign, and its quick ratio of 7.68 demonstrates the ability to cover short-term cash needs. However, its revenue fell by 24.9% in the first quarter of its fiscal 2008 compared with the same period last year. Earnings also fell to 7 cents a share in the first quarter compared with 10 cents a share in the same period last year, and its stock price is down by 10.97% in the last 12 months. Schmitt had been rated a buy since September 2005.
Ultralife Batteries ( ULBI) makes batteries, charging systems and communications accessories for use in military, industrial and consumer portable electronics. It has been upgraded to a hold from a sell. The company's revenue increased by 64.5% in the second quarter compared with the same period last year, and the growth appears to have trickled down to the company's earnings. Ultralife posted EPS of 8 cents per share in the second quarter compared with 1 cent a share. While the company has reported somewhat volatile earnings of late, TheStreet.com Ratings expects EPS growth in the coming year. Ultralife had been rated a sell since February 2007. Nutritional and personal care products developer USANA Health Sciences ( USNA) has been upgraded to a buy from a hold. Its revenue increased by 16.9% in the third quarter compared with the same period last year. Earnings improved to 70 cents a share from 55 cents per share over the same timeframe. The company's return on equity improved to 184.53% in the third quarter compared with 78.97%, a signal of significant strength within the corporation. This return on equity greatly exceeds that of both the industry average and the S&P 500. USANA Health had been rated a hold since August 2007. LG Philips LCD ( LPL) develops and manufactures LCD panels for the electronics and technology industries. It has been upgraded to a buy from a hold. The company's revenue rose by 49.1% in the third quarter compared to the same period last year. Powered by its revenue growth, EPS swung to a gain of 77 cents a share in the third quarter from a loss of 45 cents per share in the same period last year. Its net operating cash flow increased 205.52% to $1.04 billion in the same timeframe. LG Philips had been rated a hold since July 2007.
Orsus Xelent Technologies ( ORS) and its subsidiaries design cellular phones for retail and wholesale distribution in the People's Republic of China. It has been upgraded to a hold from a sell. Net income increased by 26.6% to $1.45 million in the second quarter compared to the same period last year. The stock price has increased by 126.53% in the past 12 months, and the hold rating indicates that TheStreet.com Ratings does not recommend additional investment right now. However, its return on equity decreased to 28.55% in the second quarter compared with 36.54% in the same period last year. This is a clear sign of weakness within the company. Orsus had been rated a sell since August 2007. TheStreet.com Ratings has initiated coverage of Synergetics ( SURG), which manufactures and markets microsurgical instruments for use in vitreoretinal surgery and neurosurgical applications. It has been rated a sell. The company's earnings fell to 2 cents a share in the fourth quarter of its fiscal 2007 compared with 3 cents per share in the same period last year. Synergetics' stock price has fallen by 31.01% in the last 12 months, and despite the decline, it would be a mistake to assume that the stock can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, Synergetics is still more expensive than most of the other companies in its industry.