Writing up the story on Advanced Neuromodulation Systems' (NASDAQ:ANSI) second-quarter results is almost old hat for me. After all, this was one of the companies I followed during my analyst days, and who isn't a big fan of this maker of electrical neurostimulation devices?

And sure enough, results for 2005's second quarter do nothing to mute my enthusiasm. Sales were up nearly 27% and net income climbed more than 17% from the year-ago level. While operating margins were down for the quarter, I'm not terribly concerned about this for now, since the company continues to invest heavily in R&D (11.5% of sales last quarter).

Based on the growth in this quarter, it appears as though this small company may actually be gaining share in the market for using neurostimulation to treat pain. That's no small feat, given that the company's primary competitors are Medtronic (NYSE:MDT) and Boston Scientific (NYSE:BSX).

In fact, demand for the company's new rechargeable IPG (implantable pulse generator), the Eon, has been so strong that inventory was sold out in four weeks' time. While that certainly sounds like great news, it does carry a challenge hidden within -- ANSI will need to work hard to 1) add sufficient capacity to meet demand and 2) allocate the devices it has in such a way so as not to alienate or antagonize customers.

For all of the gee-whiz aspects of this company's science, management quality still matters. And that's an area where I think ANSI really shines. I'm sure I'm somewhat biased by the fact that I personally liked this management team when I was an analyst, but so far they've never let me down. As long as I've followed the company, they've shown themselves to be honest, resourceful, and creative -- and I think that will continue to serve investors well for the time to come.

While the stock looks expensive based on the current business, future opportunities in markets like meds for Parkinson's disease, essential tremor, migraine, and depression all hold serious potential value. The market for depression meds alone is one with multibillion dollar potential. What's more, potential rival Cyberonics (NASDAQ:CYBX) has seen as much as $500 million in market capitalization added to their stock on the basis, in part at least, of the potential of the depression market.

Valuing these shares is tricky, though. I won't say that this stock can't continue to go higher from here, but the stock's price already assumes a lot of future success. By the same token, it's not often that you find a well-run opportunity playing in so many lucrative and underserved markets. I'm certainly going to continue to root for this company's success, but I'll be waiting for a sell-off in the stock before adding shares to my own portfolio.

For more med-tech Foolishness:

Great management? Yep. Great market opportunity? Yep. A technological game-changer? Yep. Could Advanced Neuromodulation Systems make the cut to be a Motley Fool Rule Breakers pick? Find out about how we select the winners of tomorrow with a risk-free 30-day trial subscription to this fine newsletter.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares). He'd love to tell you why he didn't buy these shares the day after he quit Wall Street, and he will ... as soon as he figures it out himself.