Savvy growth investors are always on the hunt for small and mid-cap companies that can one day balloon into mega-caps, taking even small initial investments on an awesome ride. One great example of a company that's experienced this transformation is Intuitive Surgical, the manufacturer of da Vinci surgical systems. Since its initial public offering (IPO) in June 2000, the stock has soared over 12,250%. The once $350 million company is now an $82 billion dollar business, thanks mostly to the da Vinci system, which is the only surgical robot on the market designed for general surgery, according to the ECRI Institute. Intuitive is a great example of the fact that small-cap companies have the ability to increase shareholder value over relatively short amounts of time in ways that most large-cap companies don't. That's why most of my stock research is done in the small and mid-cap arena

Nano-X (NASDAQ:NNOX) and Inari Medical (NASDAQ:NARI) are medical device makers, and both are relatively small right now. Nano-X is a small-cap with a $1.57 billion market capitalization, while Inari is technically a mid-cap, valued at $3.74 billion as of Nov. 11. These companies have less proven products than Intuitive Surgical, and either might fail to advance daring new products to market. Because of that, new investors might want to keep make their initial positions small. But if they are right, the upside could still be tremendous. Here's why growth investors might want to keep their eyes on Nano-X and Inari Medical.

Money raining down on people in suits

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1. Nano-X could transform the market for X-rays

The X-ray was accidentally discovered by Wilhelm Roentgen in 1895. His discovery led to the development of those amazing machines that allow us to see some of what's happening inside the human body. Modern hospitals have a variety of X-ray machines and related devices, such as magnetic resonance imaging (MRI), the computerized axial tomography (CAT) scan, and the positron emission tomography (PET) scan.

These machines can cost hospitals anywhere from $1 million to $3 million per device over time. And medical imaging systems are large and bulky, in part because they require a massive amount of heat generation (up to 2,000 degrees Celsius) for images to be created.  

Nano-X has developed a new form of X-ray machine that replaces these old and bulky analog systems with nanotechnology. Instead of using large amounts of heat to cause a source to emit electrons that in turn are used to generate the X-rays, the Nano-X core technology is a chip that distributes the job onto 100 million nanocones, each one of which is digitally controlled. This new process doesn't require the generation of high temperatures, and allows the company to make X-ray machines much smaller and for much lower costs, by two orders of magnitude. Instead of costing millions, the Nano-X device can be manufactured for $10,000.

Nano-X estimates the worldwide market for X-rays will be about $21 billion in 2021, which would be a huge jump from the market's value of $11.2 billion in 2018. Nano-X has the potential to disrupt that market in a serious way. Right now, populations across much of the world have no access or only limited access to advanced X-ray systems. Nano-X plans on providing its machine at below cost, and collecting a fee every time its device is used. Bulky, million-dollar machines will be replaced by devices that cost hospitals $10,000 or less. And the average $300 per X-ray for patients will now run about $40. And Nano-X will pocket $14 for every X-ray that is completed with its devices.

Nano-X hopes that the U.S. Food and Drug Administration (FDA) will clear its device next year. I'm confident that if the company succeeds in disrupting the X-ray market, this stock will grow to be a lot more valuable than it is today. 

2. Inari is pioneering minimally invasive technology

Inari Medical, like Nano-X, had its initial public offering (IPO) this year. Although Nano-X has a much larger (and perhaps more exciting) market opportunity, for many investors Inari is a stronger option. That's because the company has already had its two medical devices approved by the FDA. In other words, Inari has revenues, and those revenues are growing in a way that investors like to see. In its most recent quarter ended June 30, Inari's quarterly sales jumped 152% year over year. 

Inari's has two products for removing blood clots from veins -- the ClotTriever and the FlowTriever. These are minimally invasive devices that keep patients out of the intensive care unit and minimize blood loss during surgery. Right now, the standard of treatment usually involves giving patients blood-thinners and hoping their bodies will dissolve their clots on their own. It's that sub-par treatment option that Inari's devices are largely competing against.

Blood clots in the veins, known as venous thromboembolisms (VTEs), affect over 1 million Americans every year, and almost 300,000 people die from them on an annual basis. Most doctors would be happy to have a medical device that can actually remove blood clots from veins easily and safely, without major surgery. ClotTriever is used to remove blood clots in the legs, which are known as deep vein thromboses or DVT. FlowTriever is used on clots that have moved into the lung, in a dangerous situation known as a pulmonary embolism, or PE. Inari estimates its market opportunity of both of these products at $3.6 billion per year. With its current revenues of $86 million, Inari has plenty of room to grow. 

How many "ifs" are you willing to tolerate?

Inari is facing a smaller market opportunity overall ($3.6 billion) than Nano-X ($22 billion), and therefore, may have less room to grow in the long-term. However, Nano-X still hasn't commercialized its revolutionary new devices and is waiting on the FDA's confirmation of the viability of its X-ray technology. So while Nano-X has huge potential, it remains a highly risky stock until the regulatory agency delivers its verdict. Inari has price-risk (it's trading at an expensive price-to-sales ratio of 44), but it's also seeing a rapid market acceptance of its breakthrough devices. The takeaway here is that buying shares of pioneering companies rarely comes with the peace of mind that one might get from buying value stocks -- but the potential upside to businesses like Nano-X and Inari might just be worth the inherent risks. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.