Health-care products company Inamed
Inamed received a lot of attention last fall when it seemingly won Food and Drug Administration approval to sell silicone gel breast implants in the United States. Then the FDA took it back in January. Inamed does sell silicone breast implants in Europe and saline implants in the U.S., and the firm is still waiting for the silicone issue to be resolved.
While the company, which is a Motley Fool Hidden Gems watch list stock, sells a lot of implants (the segment is expected to grow in percentages in the mid-teens), that is not the product that is driving growth. The biggest grower is something called a LAP-Band system. LAP-Bands are used in a type of stomach surgery for obese patients that is less invasive and less damaging than gastric bypass surgery. Growth for this segment is expected to be greater than 30% this year over last year.
Inamed shines compared with other medical device companies such as C.R. Bard
All in all, the numbers are solid. Should the FDA ruling on silicone go the company's way, we could see things improve dramatically. Silicone accounts for 70% of breast implants done outside the U.S. As the obesity numbers in the U.S. continue to get worse, sales of the LAP-Band are likely to get better.
The biggest risk I see is the stock getting caught in a general health sector downturn. The stock is down in sympathy with the group over the last few weeks, but it could simply be a case of the right company in the wrong sector. The other, and I think smaller, risk is that Inamed does not get FDA approval for silicone breast implants.
Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time neither he nor his clients owned any of the stocks mentioned.