TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Friday, April 17.

We've upgraded aerospace components and services supplier Goodrich ( GR) from hold to buy, driven by its revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

Revenue increased by 1.6% since the same quarter last year, and EPS are up by 29.8%, though we anticipate underperformance in the coming year relative to the company's two-year pattern of EPS growth. Net income increased by 28.6% compared with the year-ago quarter, from $131.2 million to $168.7 million. Net operating cash flow increased 78.7% to $325.8 million. Return on equity also increased compared with the year-ago quarter.

We've upgraded oil and natural gas company Imperial Oil ( IMO) from hold to buy, driven by its notable return on equity, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

ROE has improved compared with the year-ago quarter, implying a modest strength in the organization. Imperial Oil's debt-to-equity ratio of 0.02 is below the industry average, implying successful management of debt levels. Its quick ratio is 0.8. Revenue fell 12.3% since the year-ago quarter, and EPS are down 20.8%.

We've upgraded energy transportation and storage company Kinder Morgan Energy Partners ( KMP) from hold to buy, driven by its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Kinder has a gross profit margin of 35.4%, which has increased from the same period last year. Its 14.8% net profit margin outperformed the industry average. Revenue fell 34.3% compared with the year-ago quarter, and EPS also decreased. We feel the company is most likely to report a decline in EPS in the coming year. Net income fell by 23.9%, from $346.7 million to $263.9 million. ROE has decreased since the year-ago quarter, implying a minor weakness.

We've upgraded Prosperity Bancshares ( PRSP), the financial holding company for Prosperity Bank, from hold to buy. This rating is driven by the company's revenue growth, increase in net income, expanding profit margins, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Revenue rose by 24.1% since the year-ago quarter. Prosperity's 64.9% gross profit margin has increased from the year-ago quarter. Net income increased by 32.8%, from $17.1 million to $22.7 million. EPS are up 28.9% in the most recent quarter compared with the year-ago quarter, and we feel the company is poised for EPS growth in the coming year.

Share price has not changed much compared with a year ago, in part due to the relatively weak year-over-year performance of the overall market and the company's stagnant earnings. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

We've upgraded URS ( URS), which provides engineering, construction and technical services to the power, infrastructure, Federal and industrial and commercial market sectors, from hold to buy. This rating is driven by the company's robust revenue growth, growth in earnings per share, compelling growth in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Revenue leaped by 55.7% since the same quarter one year prior, and EPS are up 41%. We feel that the company's two-year trend of EPS growth should continue in the coming year. Net income rose 71.4% compared with the year-ago quarter, from $26.4 million to $45.2 million. ROE also improved.

Shares have risen over the past year, outperforming the S&P 500 and driving it to a level that is somewhat expensive compared with the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

Other ratings changes included Texas Roadhouse ( TXRH), upgraded from hold to buy, and Natural Resource Partners, upgraded from hold to buy.

All ratings changes from April 17 are listed below.

 
Ticker
Company
Current
Change
Previous
GR Goodrich BUY Upgrade HOLD
GTSI GTSI HOLD Upgrade SELL
HWK Hawk HOLD Downgrade BUY
IIIN Insteel Industries SELL Downgrade HOLD
IMO Imperial Oil BUY Upgrade HOLD
KMP Kinder Morgan Energy BUY Upgrade HOLD
LOAN Manhattan Bridge Capital SELL Downgrade HOLD
MFSF Mutualfirst Financial SELL Downgrade HOLD
NADX National Dentex SELL Downgrade HOLD
NL NL Industries BUY Upgrade HOLD
NRP Natural Resource Partners BUY Upgrade HOLD
ONTY Oncothyreon HOLD Upgrade SELL
OZM Och-Ziff Capital Management SELL Initiated  
PBIB Porter Bancorp SELL Downgrade HOLD
PRSP Prosperity Bancshares BUY Upgrade HOLD
QCRH QCR Holdings SELL Downgrade HOLD
SSE Southern Connecticut Bancorp SELL Downgrade HOLD
STBC State Bancorp SELL Downgrade HOLD
TISA Top Image Systems HOLD Upgrade SELL
TXRH Texas Roadhouse BUY Upgrade HOLD
URS URS BUY Upgrade HOLD
WATG Wonder Auto Technology HOLD Upgrade SELL
WINA WInmark HOLD Upgrade SELL
 

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.

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