From worst to best the analyst ratings are as follows:
Sell - The investor should sell the stock as the performance of the company has been poor and the stock price is likely to decline in the future.
Underperform - The investor should look to selling some or all of the stock as the performance of the company is not expected to meet expectations. This may be caused to competition in the market, product issues or other factors such as weather as many stocks have been blaming recently in their earnings.
Hold - The investor should hold their current stock as the performance of the company is expected to meet requirements. Often stocks are a hold while they are continuing slow growth or maintaining their expectations.
Outperform - The investor should look to buy small into a stock or maintain shares as the performance of the company is expected to beat expectations slightly.
Buy - The investor should buy into a stock as the performance of the company is expected to beat expectations greatly. Often companies receive a buy rating when they release a new product, expand their market, or beat their competition.
As an investor you must be aware of these ratings and when a stock has received an upgrade or downgrade as it will affect the price. Ultimately you want to already be in a stock before they receive and upgrade and sell a stock before it receives a downgrade. Now as an average investor, without inside knowledge of these ratings it is difficult to time however you can take advantage of ratings. Every investors ultimate goal is to buy low and sell high so do just that. When a stock receives a downgrade lowering the price and telling you to sell, do just the opposite, buy the stock.