Updated from 10:27 a.m. EDT

Each business day, 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.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.

The following ratings changes were generated on March 7.

BJ's ( BJ - Get Report), an operator of warehouse clubs that sell food products, has been upgraded to buy. For the fourth quarter of 2007, revenue increased 2% to $2.48 billion, and earnings per share improved to 81 cents from 44 cents. The company has demonstrated a pattern of positive EPS growth over the past two years. For 2008, the market expects further EPS improvement in earnings to $2.03 a share. The company's net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. Income increased to $50.24 million from $11.83 million year over year. BJ's had been rated hold since Jan. 15.

Skechers ( SKX - Get Report), which makes footwear, has been upgraded to buy. The company's debt-to-equity ratio is very low at 0.03 implying very successful management of debt levels. With a quick ratio of 2.61, it can also cover short-term cash needs. For the fourth quarter, earnings per share declined 21% year over year to 26 cents, and revenue dropped 0.8% to $302 million. However, for 2008, the market expects an improvement in full-year EPS to $1.95 from $1.63 for 2007. Skechers has a gross profit margin of 42%, which we consider strong. However, its net profit margin of 4% trails the industry average. Skechers had been rated hold since Aug. 15.

Patterson-UTI ( PTEN - Get Report), an offshore contract drilling company, has been upgraded to buy. The company's debt-to-equity ratio is very low at 0.03, implying successful management of debt levels. With a quick ratio of 1.32, it should also be able to avoid short-term cash problems.

The stock has risen 6.4% in the past year, and we believe it shows more upside potential. Despite a high gross profit margin of 41%, Patterson-UTI's net profit margin of 16% trails the industry average. For the fourth quarter, revenue fell 19% year over year to $520.5 million, and earnings per share declined to 55 cents from 97 cents over the same period. With a price-to-earnings ratio of 8.36, however, the stock trades at a significant discount to the industry average and the S&P 500. Patterson-UTI had been rated hold since Dec. 12.

CTC Media ( CTCM), which offers TV entertainment programming in Russia, has been upgraded to hold. Notable return on equity, robust revenue growth and a solid financial position are balanced by a premium valuation and weak operating cash flow. CTC Media's return on equity of 22% significantly exceeds the industry average. For the third quarter of 2007, revenue rose 33% to 94 million, and earnings per share improved to 11 cents from 5 cents. The stock has surged 28% over the past year. This price increase has netted the stock a P/E of 38.55, making it more expensive than others in its industry. Moreover, net operating cash flow has decreased 13% to $20.86 million year over year. CTC Media had been rated sell since March 6.

Barr Pharmaceutical ( BRL), a maker of generic and proprietary pharmaceuticals, has been downgraded to hold. Strengths such as robust revenue growth, good cash flow from operations and expanding profit margins are balanced by a decline in the stock price, deteriorating net income and poor debt management.For the fourth quarter, revenue leaped 90% year over year, but earnings per share declined to 35 cents from 76 cents in the same period. However, for 2008, the market expects an improvement in full-year EPS to $3.20 from $1.30 in 2007. Net operating cash flow increased by 86% to $125.9 million.

Shares have fallen 5.9% in the past year. Despite the decline, the stock's price-to-earnings ratio of 35.32 puts it at a premium to others in its industry. Barr Pharmaceuticals had been rated buy since Jan. 15.

Additional ratings changes from March 7 are listed below.

Ticker Company Name Change New Rating Former Rating
ALLN ALLIN CORP Downgrade Sell Hold
ASGR AMERICA SERVICE GROUP INC Downgrade Sell Hold
BRL BARR PHARMACEUTICALS INC Downgrade Hold Buy
BJ BJ'S WHOLESALE CLUB INC Upgrade Buy Hold
CRDN CERADYNE INC Downgrade Hold Buy
COLB COLUMBIA BANKING SYSTEM INC Downgrade Hold Buy
KEM KEMET CORP Downgrade Sell Hold
LGTY LOGILITY INC Downgrade Hold Buy
MEI METHODE ELECTRONICS INC Downgrade Hold Buy
MDF METROPOLITAN HLTH NTWRKS INC Upgrade Buy Hold
MKSI MKS INSTRUMENTS INC Upgrade Buy Hold
PTEN PATTERSON-UTI ENERGY INC Upgrade Buy Hold
SKX SKECHERS U S A INC Upgrade Buy Hold
XRIT X-RITE INC Downgrade Sell Hold
LTM LIFE TIME FITNESS INC Downgrade Hold Buy
IBI INTERLINE BRANDS INC Downgrade Hold Buy
CMED CHINA MEDICAL TECHNOLGS -ADR Upgrade Buy Hold
CBEY CBEYOND INC Downgrade Sell Hold
CTCM CTC MEDIA INC Upgrade Hold Sell
CPX COMPLETE PRODUCTION SERVICES Upgrade Hold Sell
CVLT COMMVAULT SYSTEMS INC Downgrade Sell Hold
CENTA CENTRAL GARDEN & PET CO Initiated Sell

This article was written by a staff member of TheStreet.com Ratings.