Woulda, coulda, shoulda.

I still remember the call in late December of 2000. I was still a Wall Street analyst. A hedge-fund manager that I liked and respected told me to buy up as much Medical Action Industries (NASDAQ:MDCI) stock as I could, because it was a "slam dunk." The stock was at three bucks and change then. It soared to more than $20 within that year.

Although the stock really hasn't gone anywhere since then, the business has been steadily improving.

Results in the fourth quarter were pretty much par for this company's course. Sales were up 16%, while net income climbed about 10%. Though margins clearly suffered a bit, much of that was due to higher resin prices that hurt the containment business -- resin accounts for roughly 70% of the containment products' cost of goods.

The company does not offer a complete income statement with its financial release (to say nothing of a complete balance sheet or cash flow statement), but it provided enough information to make a few additional conclusions.

First, working capital management has stayed quite sound, and receivables and inventories both appear well controlled. Second, the company made great progress cleaning up its balance sheet, paying down almost $9 million in debt during the fiscal year.

This debt pay-down is good news -- it gives the company more freedom to pursue additional acquisitions. Strategic purchases have been a major part of the Medical Action story so far, and I don't believe that's about to change.

The good news/bad news about Medical Action is that it does not play in the high-tech side of health care. Instead, it makes disposable goods on the mundane side, like containment bags, procedure kits, and a host of other minor disposables, dressings, and sponges. "Mundane" is not a bad word in this case, though; these products are essential. What's more, focusing on these products allows the company to take advantage of an easier (and cheaper) approval process with the Food and Drug Administration.

Medical Action certainly has competition -- a host of small players and divisions of Cardinal Health (NYSE:CAH) and Tyco (NYSE:TYC) -- but that hasn't stopped the company so far.

Though I'm currently inclined to see this stock as more-or-less fully valued, it's a high-quality small-cap company in an attractive space. I'd prefer to buy on a dip, but this is definitely an interesting idea for small-cap investors who want a solid non-tech company.

Check up on the health-care business with these Fool Takes:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).