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 that 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 July 9.

Medical Properties Trust ( MPW - Get Report), a health care real estate investment trust, has been upgraded to buy. It has shown very impressive revenue growth, jumping 57% compared with the same quarter last year. As a result, EPS also improved and has remained stable over the past year. The company's net income increased 10% vs. the same quarter last year, significantly outperforming the S&P 500. In addition, both the gross profit margin and the net profit margin are higher than the industry and S&P average. Medical Properties Trust had been rated hold since April 10, 2007.

Branded food company Diamond Foods ( DMND) was downgraded to hold. The company has reported significant EPS improvement over the most-recent quarter and has displayed a pattern of positive EPS growth over the past two years. Net income compared with the same quarter a year ago rose 127%, significantly exceeding the growth rate of the S&P 500. Although return on equity has slightly decreased, the debt-to-equity ratio is still very low, implying a successful management of debt levels. Diamond Foods had been rated buy since June 24.

Visual computing technologies provider Nvidia ( NVDA - Get Report) has been downgraded to hold. Revenue rose by 36%, fairly better than the industry average. This also affected the bottom line, improving EPS. The company has no debt to speak of and maintains a favorable quick ratio of 2.59. Stock share price has done very poorly compared with a year ago, however. The net result is a decrease by 58%, worse than the S&P 500. Net cash flow has also decreased, and compared with the industry average, the firm's growth rate is much lower. Nvidia had been rated buy since ratings were initiated on July 7, 2006.

American Capital ( ACAS), a buyout and mezzanine fund, was downgraded to sell. The company has experienced a sharp decline in earnings per share during the most-recent quarter, and it reported EPS in the past fiscal year of $4.38, vs. $6.51 in the prior year. Net income has significantly decreased by 706% vs. the same quarter the year before, severely underperforming in comparison with the S&P 500. Net operating cash flow has also decreased, down 112% compared with the same quarter last year. The stock has fallen by more than 50% in the last year, which is worse than the overall S&P performance. American Capital had been rated hold since May 5.

Golden Star Resources ( GSS - Get Report), a gold mining and production company, was downgraded to sell. Based on net income from the same quarter a year ago, the company has significantly underperformed compared with the metals and mining industry. Return on equity has also greatly decreased from last year, a sign of major weakness within the corporation. At 29%, the gross profit margin is low but has still increased from the same quarter one year prior. The company reported flat EPS over the last quarter but has shown a pattern of declining EPS over the past two years. Golden Star Resources had been rated hold since June 14, 2007.

Additional ratings changes from July 9 are listed below.

Ticker Company Name Change New Rating Former Rating
ABP Abraxas Petroleum Corp. Downgrade Hold Buy
ACAS American Capital Ltd. Downgrade Sell Hold
CITZ CFS Bancorp Inc. Downgrade Hold Buy
DMND Diamond Foods Inc. Downgrade Hold Buy
FBCM FBR Capital Markets Corp. Initiated Sell
GSS Golden Star Resources Ltd. Downgrade Sell Hold
MPW Medical Properties Trust Upgrade Buy Hold
NVDA Nvidia Corp. Downgrade Hold Buy
SWCC Southwest Casino Corp. Downgrade Sell Hold
UUU Universal Security Instruments Downgrade Sell Buy

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