Give credit where credit is due: Fool co-founder Tom Gardner sure can pick winning companies, including the one I want to discuss today, Possis Medical (NASDAQ:POSS).

For its fiscal third quarter of 2004, this Motley Fool Stock Advisor pick reported a 32% increase in revenues. Earnings increased at nearly twice that rate, coming in at $0.16 per diluted share.

Revenue and earnings growth aside, there is another thing to love about Possis -- its simplicity. Sales of its AngioJet catheter system make up 98% of the company's revenues. So if you understand just this one product, and can spend a few minutes a year pondering its sales prospects, you are guaranteed to have a pretty decent handle on Possis.

Say all you want against sloth: It still has its virtues. One of them is that it often leads you to invest in simple-to-understand, one-trick ponies that do their single tricks very well indeed. Think Motley Fool Hidden Gems stock Middleby (NASDAQ:MIDD), with its pizza ovens. (Never heard of the company? Sign up for a free trial and read all about it.)

When we look at Possis' results, we see that gross margins have slipped a bit, down 1% from 76% a year ago. But sales, general and administrative expenses also dropped. That raised the company's operating margins by more than 3% and more than offset the slight decline in gross margin. The fact that operating margins were pressured by increased marketing expenditures and expansion of the company's sales force this year, yet still managed to grow, says volumes about Possis' profit-making power. Those marketing efforts also lend investors hope that the company will continue its profit-growing ways.

Looking ahead, the company now predicts earnings per diluted share to total about $0.60 for the full year. And looking even further ahead, it expects sales growth to continue apace at about 32% for fiscal 2005, and earnings growth to range somewhere from 38% to 60%.

At the low end of those earnings estimates, the company has a forward P/E of 31 at yesterday's closing price of $26 a stub. At the high range, the P/E drops to 27. Put either of those numbers up against the company's profit growth rate of 32%, and you have yourself quite a bargain PEG.

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Fool contributor Rich Smith doesn't own shares i n any company mentioned in this article.