CPI International AG ( CPII), which through its subsidiaries, provides microwave and radio frequency, power and control products, was upgraded to hold. The primary factors resulting in the upgrade are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and generally poor debt management. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment & Instruments industry. The net income increased by 6.8% when compared with the same quarter one year prior, going from $5.76 million to $6.15 million.

Conversely, the company's revenue growth trails the industry average of 29.0% -- in its most-recent quarter it grew slightly by 7.2% year over year. Despite the tepid growth compared to its peers, the growth in revenue does appear to have trickled down to the company's bottom line, improving its earnings per share. CPI International has improved earnings per share by 9.4% in the most-recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past year.

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