Among the stocks currently meeting our Foolish 8 criteria, one of the most exciting is Meridian Medical Technology (Nasdaq: MTEC), the market leader in drug auto-injectors.

Meridian's pre-filled, disposable auto-injectors have both commercial and government applications. For example, if you're an allergy sufferer in need of a quick dose of ephinephrine, Meridian's EpiPen auto-injector is your cure. Or if you're a U.S. troop at risk of nerve agent exposure, you'll have an antidote-filled Meridian auto-injector as part of your standard equipment.

Meridian's 90% market share in the auto-injector market is just one of the reasons we showcased the company in the April edition of The Motley Fool Select. Last week, the company turned in record quarterly results. I'll reference those results as I highlight the four reasons I think this company represents an excellent investment opportunity.

1. Beneficiary of increased defense spending
Post 9/11, we all are brutally aware of what a dangerous world we live in. The threat of war and/or inhibited foreign trade is a looming negative for many companies -- but not Meridian. Last quarter's sizzling 50.7% sales growth was driven by orders to supply the U.S. military and homeland security. Meridian is the sole supplier of nerve agent antidote auto-injectors to the U.S. Department of Defense.

In addition, Meridian's nerve agent antidote auto-injector and anticonvulsant auto-injector are both on the authorized equipment list for the U.S. Department of Justice's state domestic preparedness equipment program. So as money is distributed to the states to prepare for terrorist-related emergency response requirements, Meridian is a primary beneficiary.

For fiscal 2002, which ends in July, Meridian's government sales are expected to reach $37 million. That represents growth of over 70% compared to fiscal 2001. And while government sales are currently expected to return to more normalized levels next year (meaning annual sales of something closer to $25 million), I anticipate that over the next several years, defense-related auto-injector sales will be heading higher as the threat of chemical warfare mounts.

2. Cash piling up; no debt
Over the past year, Meridian has generated nearly $10 million in free cash flow (not including tax-related options benefits) on $78 million in sales. So for every dollar of sales, Meridian takes about 13 cents to the bank. That's an admirable level of cash generation, and it only looks to increase as the company gains scale in its auto-injector business.

Through mid-2001, the company carried about $17 million in high-interest debt. But after a private placement of stock last July, Meridian vanquished all of that debt and now has about $2 cash per share.

3. Two significant expanding opportunities
Meridian is using its strong cash flow from the auto-injector business to fund two very promising opportunities.

The first and most significant is a new electrocardiac mapping system that dramatically improves the diagnosis of heart attacks. On March 12, Meridian received clearance from the FDA to market its PRIME ECG system. This product is the first major advance in non-invasive ECG in nearly 60 years. According to the company, "The PRIME ECG system has been found to identify more than 90 percent of heart attacks in minutes, compared to a sensitivity of only 45-68 percent for a conventional ECG as shown in other studies." Upon approval of PRIME ECG, Meridian began building up a sales force to market the product. This represents a multi-billion dollar market, and with scale, the PRIME ECG is expected to attain pharmaceutical-like gross margins of 75-85 percent.

Second, Meridian has an emerging "telemedicine" business whereby its devices allow diagnostic information to be transmitted by telephone. Monitoring a patient's information from home or office is much more economical than via repeated doctor's visits. It's a novel concept that's beginning to show traction. Sales in the most recent quarter grew 145.8% to $1.9 million. Meridian is conducting this business through a distribution partner, Israel-based SHL Telemedicine, which is in the process of acquiring a U.S. company, Raytel Medical Corporation. If the acquisition goes through, then SHL will have an inroad into the U.S. market.

4. Attractive valuation
You'd probably expect to pay a high price for a strong cash producer with explosive growth and a lock on its core market. But Meridian shares are priced quite reasonably at about 18 times trailing free cash flow, not to mention the $2 per share in cash. I wouldn't consider the current price unreasonable for just the auto-injector business. It's almost as if the market is giving you PRIME ECG and telemedicine for free. If either of those businesses take off, this stock could have tremendous upside.

Needless to say, I'm a Meridian shareholder myself, and I'm considering adding to my position if the stock stays in the low $30s.

Matt Richey is a senior investment analyst for The Motley Fool. At the time of publication, he owned shares of Meridian Medical Technology. Matt's personal portfolio is available for view in his profile. The Motley Fool is investors writing for investors.