Do you have a chronically sore hip? Maybe a "trick knee" that gives you trouble from time to time? Well, you might find yourself becoming a customer of Zimmer Holdings (NYSE:ZMH) someday. Spun off from Bristol-Myers Squibb (NYSE:BMY) in 2001, Zimmer has built itself into the largest pure-play orthopedic company in the world.

Sales in the fourth quarter grew 14% to more than $800 million, thanks in part to over 9% growth in volumes shipped. Sales of hip- and knee-replacement devices, which make up the company's bread-and-butter business, grew 11% and 21%, respectively, for the quarter, and Zimmer continues to maintain its No. 1 market position in this area. For the year, Zimmer nearly doubled its free cash generated to $622 million.

Not content to rest on its laurels, management is pursuing a minimum of 10% sales growth for all of 2005 and is looking for at least 20% earnings-per-share growth. Though competitors such as Biomet (NASDAQ:BMET), Stryker (NYSE:SYK), and Johnson & Johnson (NYSE:JNJ) aren't simply going to roll over and give up, Zimmer's strong position in minimally invasive surgery and high-quality advanced materials should help keep the growth on track.

While most health-care companies stand to gain as the Baby Boomers age, Zimmer might benefit more than most. With the Boomers having been more active than previous generations, and expecting to remain so even in their golden years, the demand for artificial hips and knees should remain strong. After all, avid joggers and the overweight both put stress on their joints, and that stress can lead to degeneration, pain, and ultimate surgical replacement.

Zimmer also has considerable potential for overseas growth. While growing cost control in Europe might slow the growth potential there, Asia is wide open. Zimmer garnered only 14% of its revenue from Asia in 2004, but three-quarters of that total came from Japan. The sheer size of the Chinese and Indian markets could make both of them major opportunities. As these economies continue to grow, more money should be available for procedures such as hip or knee replacement, and a growing middle class would likely demand a higher quality of life as well.

If there's a flaw with Zimmer, it's in the valuation. Zimmer carries a price tag that would make a value investor's bones ache. The shares trade at more than 36 times reported trailing earnings, and the enterprise value-to-free cash flow ratio is above 32. The valuation is in line with those of Zimmer's peers, such as Biomet and Stryker, but it's still high. Zimmer is clearly the leader in a growing and highly profitable market, though, so it's up to investors to decide whether their joints can bear that weight.

Fool contributor Stephen Simpson, CFA, owns shares of Johnson & Johnson.