Ultralife Batteries (NASDAQ: ULBI) provides a range of non-rechargeable and rechargeable batteries, charging systems and communications accessories for use in military, industrial and consumer portable electronics products. The company's non-rechargeable lithium batteries are used to power such diverse devices as radios, emergency radio beacons, search and rescue transponders, portable medical devices and smoke alarms. Its lithium polymer and lithium ion rechargeable batteries are used in such portable devices as laptop computers and cell phones. The US Department of Defense accounts for about twenty percent of Ultralife's sales. Major commercial customers include General Dynamics (NYSE: GD), General Motors (NYSE: GM) and RadioShack (NYSE: RSH).

The company pleased investors last week, when it issued upside guidance for the current quarter and year. Management sees Q2 revenues of more than $75 million ($60.43M consensus) and FY08 revenues of at least $250 million ($240.27 million consensus). The CEO said the better performance was attributable to "strong shipments to date, strong backlog in most businesses and requests from customers for accelerated deliveries against their orders."

ULBI shares popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with one "strong buy," three "buys" and two "holds." Analysts see an 18% average annual growth rate, through the next five years. The ULBI Sales Growth rate (53.56% y/y), EPS Growth rate (0.00 to 0.14 y/y) and Return on Investment (11.09%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 55% of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.50 and $22.98. A stop-loss of $11.50 looks good here. Note that the firm is expected to report Q2 results in late July.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.