It's no surprise that Stryker's (NYSE:SYK) fourth-quarter results were excellent. The medical device company's ability to continually deliver strong results, coupled with an ongoing bullish outlook, shows how investing in profitable and growing industries can be very rewarding.

More of that in a minute, but first some fourth-quarter highlights. Sales were up across the board. Management's increased focus on the orthopedic division helped drive strong quarter-over-quarter growth in the trauma (26%), spine (28%), and craniomaxillofacial (27%) segments. The laggard of the group was hips (5%). Management continues to view the development of the OP-1 biologic -- a protein intended to stimulate bone growth -- as a potential contributor to the business beginning in fiscal 2008. Lastly, Stryker enjoyed continued strength in its MedSurg equipment business, led by strong sales in both surgical instruments and the endoscopy business.

Besides hip sales, the only weakness Stryker seemed to experience was lower profit margins in Japan. Otherwise, most of the varied businesses grew at the market rate or greater. Add improved gross margins and a lower realized tax rate, and Stryker's earnings grew at an accelerated 19.6% (on a comparable basis).

Management is also forecasting that this year will be similar to 2006, with 11% to 13% gains in revenue and 20% gains in diluted per-share earnings. To achieve these goals, management said, the focus would be on execution. Management plans to strengthen business units as it continues to integrate recent acquisitions. It's also confident that it has increased market-share opportunities, given general pricing pressures and the uncertainty of Biomet's (NASDAQ:BMET) direction, what with the pending Department of Justice investigation.

Judging by the strong gains in share price since July and the positive rating in Motley Fool CAPS, it looks like most investors believe the potential gains outweigh any risks. It's not hard to see why; over the past 19 years, Stryker's share price has appreciated at a compounded average growth rate of 25%. And Stryker isn't alone; Biomet, Zimmer (NYSE:ZMH), and Smith & Nephew (NYSE:SNN) have all benefited from the growing and profitable industry.

However, while focusing on such positive dynamics can generate outsized gains, focusing on the price is just as Foolish. Considering the 50% jump in share price, Stryker's valuation is at the top end of its recent price-to-earnings trading range. While it's hard to imagine Stryker's momentum slowing down anytime soon, the value hound in me would wait for a better entry price.

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Fool contributor Matthew Crews welcomes your feedback -- really! He has no financial position in any of the companies mentioned. The Motley Fool has a disclosure policy.