Note: Our quantitative model makes stock recommendations based on GAAP figures that may differ materially from data as reported by the companies themselves. As a result, rating changes are occasionally driven by so-called nonrecurring items. As always, we urge readers to use TSC Ratings' reports in conjunction with additional information to construct their opinions on the value that should be placed on any given stock.The following ratings changes were generated on Tuesday, March 24. We've initiated coverage on apparel retailer American Apparel ( APP) at sell, driven by the company's debt management. American Apparel's 0.8 debt-to-equity ratio is somewhat low overall but higher than the industry average. Its quick ratio of 0.4 is low, suggesting possibly weak liquidity. Earnings per share declined by 16.7% in the most recent quarter compared with the same quarter last year, but we feel the company is poised for EPS growth in the coming year. Its 59.9% gross margin has increased from the year-ago period; its 2.7% net profit margin trails the industry average. Net operating cash flow improved to $20.31 million, compared with no operating cash flow in the year-ago quarter. Shares have tumbled 59% over the past year, underperforming the S&P 500. We've upgraded Illumina ( ILMN), which engages in the development, manufacture, and marketing of integrated systems for the analysis of genetic variation and biological function, from hold to buy. This rating is driven by the company's robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Revenue rose by 42.9% since the year-ago quarter, compared with the industry average of 2.5% growth. Illumina reported significant EPS improvement in the most recent quarter compared with the year-ago quarter, and we feel that its yearlong trend of improving EPS should continue. Net income increased from -$4.1 million in the year-ago quarter to $28.9 million, outperforming the S&P 500 and the life sciences tools and services industry. Illumina's 69.2% gross profit margin has increased from the year-ago quarter, and its 18% net profit margin outperformed the industry average. Net operating cash flow increased to $86.1 million compared with the year-ago quarter.