This two-pound DNA-reading diagnostic device could soon be aiding the fight against HIV, Ebola, and other diseases. Source: Cepheid

Picture a small wireless device that can determine in minutes whether you have a serious disease, versus having to endure the agony of waiting day after day to hear back from your doctor. Now imagine that this device is located not in a remote laboratory, but rather in your local pharmacy, on your doctor's desk, or even in the backpacks of healthcare personnel working in disaster zones.

Pretty cool, huh?

It's not sci-fi; it's a rapidly approaching reality. Thanks to advances in wireless technologies and low-cost biosensors, the floodgates are opening for sophisticated point-of-care diagnostics, or POC.

POC is already in use for simple applications such as glucose monitoring, but the latest micro-devices are being used on people who show symptoms of diseases such as Ebola. The payoff is that having results quickly can minimize the need for quarantining. There are also applications coming for cancer, where enormously accelerated turnaround times could facilitate much faster treatment.

But that's just the beginning. Since POC is spot-on with the goals of personalized medicine, it's an industry that has enormous potential and presents multiple intriguing opportunities for investors.

Let's dig into three companies to watch in this space. The first is Abbott Laboratories (NYSE:ABT), an oft-overlooked healthcare stock that is the surprising market leader in POC. Next comes pure play Cepheid (NASDAQ:CPHD). The California-based small cap sports significantly higher risk, but its technology is at the heart of where the POC industry is going. Last but not least, Opko Health (NASDAQ:OPK) is developing a fascinating platform for POC that could catalyze its shares.

Abbott is the stealth play in POC
Abbott Pharmaceuticals is composed of four subsidiaries: medical devices, pharmaceuticals, nutrition, and diagnostics. Abbott's overall medical-device sales were a big yawn as usual last quarter. (Sales were up 3.1% to $1.3 billion.) But slice and dice the numbers a bit further, and you'll see diagnostics gained 8.7% to reach sales of $1.2 billion in Q2. That makes it this second best-performing unit in the company after established pharmaceuticals. Sharpen your knife a bit further, and Abbott's POC segment jumps out from within their diagnostics business, posting an 11.5% increase in sales year over year.  

Diagnostics now account for 25% of Abbott's valuation. Abbott CEO Miles White sees increased market penetration in POC as an important growth driver. Profitability is expected to remain steady for Abbott overall (gross margins were at 58% last quarter), and White said he expects high-single-digit operational growth for diagnostics to continue.

The company's market leadership in POC is based on the company's i-Stat handheld device, which is now found in one in three emergency rooms in the country.The blood analyzer provides lab-quality results in a situation where every minute counts. Abbott also gained FDA clearance last quarter for a first-of-its kind i-Stat test to detect pregnancy status in emergencies.

Cepheid's new laboratory in a box
California-based Cepheid recently unveiled a DNA-reading diagnostic device called the Omni, which is expected to be available outside the U.S. during the first half of 2016. CEO John Bishop said the company will soon be applying for FDA approval to put the device directly in drugstore clinics or doctors' offices, rather than confined to laboratories.

The Omni is the latest in the company's GeneXpert devices. The company showed solid 13.7% year-over-year growth in revenues of $132.5 million last quarter, which exceeded estimates. On the flip side, the company's net loss was slightly higher than expected, $0.23 per share versus the expected $0.21 per share. Still, on a non-GAAP basis, the company is projecting itself to be profitable for the year, with net income in the range of $0.25 to $0.29 per share.

While questions have been raised about the quality of POC tests, the GeneXpert system passed several independent evaluations for clinical applications and cost-effectiveness, as reported in peer-reviewed journals such as the American Journal of Clinical Pathology. Cepheid has nearly $300 million in cash and is operating cash-flow positive. While I think there is plenty that distinguishes Cepheid from the competition, as validated by continued sales growth, Cepheid is only for investors with an extremely high risk tolerance.

Opko Health's micro-device highlights the appeal of this market
Rounding out the list of companies is Opko Health, a stock that colleague Sean Williams recently appropriately described as one that "pulls on the heartstrings of bulls and bears." Specifically, the stock took it on the chin recently after a double-miss in the second quarter.

While investors in Opko tend to focus on CEO Philip Frost, who has a track record of developing strong companies, or the company's promising drugs, it's worth remembering that Opko has a powerful possible catalyst in POC. The company's platform technology, the Claros 1, could potentially define the course of patient treatment for several diseases in a single office visit. The Claros 1 uses an in-office finger-stick blood analysis to address the large prostate specific antigen (PSA), testosterone, and Vitamin D testing market. The company claims the potential in PSA is $750 million, $525 million in testosterone, and a whopping $3.5 billion in Vitamin D testing for its POC analyzer.

As a Motley Fool Industry Focus interview pointed out,  Opko isn't the kind of company where the investing opportunity is going to disappear today, tomorrow, this month, or even this year. But as highly accurate medical devices migrate out of remote laboratories, the potential of POC diagnostics is something investors ought not to ignore.

The global market for POC should reach $19.3 billion by 2018, according to figures from BCC Research. The United States is advancing at nearly a 5% compounded annual growth rate. Globally, the CAGR is 4.5%. In terms of POC for infectious diseases, research firm TechNavio forecasts a CAGR of 7.5% over the period 2014-2019.

While there are major opportunities ahead, the real payoff I'm hoping for lies elsewhere. POC will allow diagnosis and treatment to happen in the same doctor visit for many more diseases, spelling the end of a lot of patient anxiety. And the value of that goes far beyond compelling -- it's priceless.

Cheryl Swanson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.