We've upgraded Ultralife ( ULBI), which designs, manufactures, installs, and maintains power and communications systems worldwide, from hold to buy. This upgrade is driven by strengths in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Ultralife's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 104.2%. Growth in the company's revenue appears to have helped boost the earnings per share. Ultralife's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems. Ultralife reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Ultralife turned its bottom line around by earning $0.34 versus -$1.82 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.34). The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 3738.3% when compared to the same quarter one year prior, rising from -$0.13 million to $4.66 million.