A Traits Evaluation can be purchased at the Traits Expert on the Racing tab. This will make colored stars appear on your horse's page in the Stats section. One star will correspond to each of the 6 basic stats: Acceleration, Breaking, Early Speed, Late Speed, Rating and Versatility.
The color of the star indicates how good or bad a stat currently is. Keep in mind that horse's stats will increase through training to a pre-determined maximum. If a horse has not yet maxed, having red/yellow stars may not be a bad thing because there is still room for improvement.
In general, a horse with all or mostly green stars is going to be high stakes (G2+) caliber. A horse with a mix of yellow and green will probably be Listed-G3 level. A horse with mostly yellow may also be Listed level. A horse with a mixture of yellow and red or mostly red will usually be Allowance level. This is not an exact science since other factors also determine how well a horse races.