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.

Lawn and garden products maker Scotts Miracle-Gro ( SMG - Get Report) has been downgraded to hold from buy. The company's fourth-quarter revenue grew by 3.4% compared with the same period last year, but it trailed the industry average growth rate of 10.3%. Its return on equity improved to 24.32% in the quarter, a signal of significant strength within the corporation.

Scotts' return on equity exceeds that of both the S&P 500 and the chemicals industry. However, the company has reported somewhat volatile earnings in the past year, and its debt-to-equity ratio of 2.35 in the fourth quarter is higher than the industry average. Its stock price has dropped 22.73% in the 12 months prior to Nov. 8. Scotts Miracle-Gro had been rated a buy since November 2005.

Southwest Airlines ( LUV - Get Report) has been downgraded to hold from buy. The company's net income grew 237.5% to $162 million in the third quarter compared with the same period last year, and its revenue increased by 10.6% over the same time frame. Southwest's EPS improved to 22 cents a share in the third quarter compared with 6 cents a share in the same period last year.

Stable earnings over the past year indicate that the company has sound management over its earnings and share float. However, its gross profit margin of 30.10% in the third quarter has decreased from the same quarter last year, and its stock price has gone down by 13.40% in the 12 months prior to Nov. 8. Looking ahead, TheStreet.com Ratings does not see anything in the company's numbers that suggest this downward trend will change in the next year. Southwest had been rated a buy since July 2007.

Talisman Energy ( TLM) develops, transports and markets crude oil and natural gas. It has been upgraded to buy from hold. The company's revenue grew by 8.4% in the third quarter compared with the same period last year, outpacing the industry average of 4.9%. Talisman also demonstrates good cash flow from operations and expanding profit margins.

Its stock price went up by 27.69% in the 12 months prior to Nov. 8, driving it to a price level that is somewhat expensive compared with the rest of its industry. However, the other strengths the company shows justify the higher price level. Talisman had been rated a hold since August 2007.