Analyst upgrades:

• UBS upgraded Wendy's/Arby's (NYSE: WEN) to Buy from Neutral and raised its target to $5.50 from $4.90 based on improving sales momentum at Wendy's and potential improvements at Arby's.
• Goldman upgraded 3M (NYSE: MMM) to Buy from Neutral and raised its target to $85 from $78. The firm cites 3M's short-cycle exposure and relative valuation for the upgrade.
• Thomas Weisel upgraded JCPenney (NYSE: JCP) to Market Weight from Underweight citing comfort in the company's intermediate-term recovery potential.
• UBS AG (NYSE: UBS) was upgraded to Buy from Hold at ING Group.
• Gap (NYSE: GPS) was upgraded to Overweight from Equal Weight at Barclays.
• Alliance Healthcare (NYSE: AIQ) was upgraded to Outperform from Market Perform at Wells Fargo.

• Janney Montgomery upgraded City Holding Company (NASDAQ: CHCO) to Buy from Neutral due to valuation and a belief the banking franchise is strong. The firm has a $33 price target on the stock.
  
• JMP Securities upgraded Acadia (NASDAQ: ACAD) to Outperform from Market Perform following the announcement that it has partnered with Biovail to develop and commercialize Pimavanserin. The firm has a $7 price target on the stock.
  
• RBC Capital upgraded Methanex (NASDAQ: MEOH) to Outperform from Sector Perform and raised its price target to $18 from $11 based on its improving free cash flow outlook.
• MGM Mirage (NYSE: MGM) was raised to Buy from Underperform at Banc of America/Merrill.
• Research in Motion (NASDAQ: RIMM) was lifted to Neutral from Underweight at JP Morgan.
• Con-Way (NYSE: CNW) was upgraded to Overweight from Equal Weight at Stephens.

Moody's is giving the rating of several home builders another haircut. The current downgrades include Hovnanian (NYSE: HOV), M/I Homes (NYSE: MHO), and Meritage Homes (NYSE: MTH).

Aside from what the ratings change will do to the shares of the companies, this raises, once again, the question of whether a large home builder could go into Chapter 11. Increasingly, the answer to that question looks like it may be "yes."

According to CNN Money, "Homebuilders keep lowering prices to meet flagging demand, crimping profit margins at a time when overall sales continue to deteriorate." At some point soon, many of these companies will need to raise money. It is not clear that they will be able to in the current credit market.

Shares in Meritage certainly trade as if investors believe that the company may have to restructure and that investors may get the short end of the stick. At the current share price of $8.41, the stock is down from a 52-week high of over $47.

Investors may be better off getting out of these stocks with losses. Otherwise they may ride the train to "zero."

Douglas A. McIntyre is an editor at 247wallst.com.