The only good news about diabetes is that most of us don't have to live with its effects.
And that's why most people can't appreciate the technology and the profit potential that a tiny company based in Ireland brings to the table.
Listen to what one diabetic has to say...
"No one gets a report card that tells them exactly how long and precisely how well they're going to live -- unless they're diabetic."
"A highly specialized blood test I undergo every 90 days is able to pinpoint exactly how well my diabetes is under control, and the precise degree to which I am at risk for complications like blindness, kidney failure, amputation and other devastating consequences of poor control. Diabetics who consistently have strong results on this ONE test are able to avoid complications and have the same life expectancy as a non-diabetic."
The "one" periodic test is for levels of glycated hemoglobin -- a measure of average blood sugar over the preceding three months.
The leader in the field for this diagnostic is a company that almost no one has heard about -- Trinity Biotech (Nasdaq: TRIB), a $300 million medical device company in Bray, Ireland.
And the source of the quote above is StreetAuthority's Andy Obermueller, an insulin-dependent or "Type I" diabetic since age 8, and the editor of Game-Changing Stocks.
And in Trinity, which trades for roughly $14 per share, Andy believes he's found a game-changer.
Trinity's diabetes-testing device, the "Premier Hb9210," was introduced in the United States late last year after being launched in Europe in May 2011. Trinity says it expects to sell 200 of the $25,000 devices in the current fiscal year.
And that's likely just the start. There were an estimated 366 million diabetics worldwide in 2011. During the next two decades, the global diabetes population will grow nearly 50%, according to Denmark's Novo Nordisk (NYSE: NVO), a pharmaceutical company that supplies more than half of the world's insulin.
By the year 2030, about one in 15 people worldwide will suffer from diabetes, giving rise to huge demand for treatment and diagnostic products.
So what makes Trinity's offering special?
The game-changing aspects of Trinity's new Premier product line up "like ducks in row," as Andy puts it: "The (Premier) machine is far easier to use. It generates results faster. The tests provide more reliable readings that help doctors and patients fine-tune care."
Moreover, as Andy noted in his most recent issue (you'll need to login to view), existing diagnostic systems work well for some people, but they don't account for the many differences in blood chemistries among genders, races and ages. Trinity's device, by contrast, delivers highly accurate results for everyone.
That's a welcome trait in a global market. In addition to Europe and the United States, Trinity sells the Premier in South America, Southeast Asia, Turkey and Taiwan.
But the best may be yet to come. On the company's quarterly earnings conference call on Oct. 18, Trinity said that approval for the Premier system is likely in China in January. This country is projected to be a 100-machine-a-year driver as China continues its massive hospital-building boom.
Add it all up and what you get is a best-in-class product being sold into a rapidly expanding market -- a recipe for success if there ever was one.
Here's more from Andy on Trinity...
Bob: How do the numbers look for Trinity?
But stability is exactly what I want to see on earnings day. Results within expectations tend to be part of a lasting uptrend, and they are just what a jittery Wall Street staring down the barrel of an uncertain economy in a too-close-to-call election needs. Year-over-year revenue was up more than 5% in the three months ended September 30. Profits rose better than 13%.
Even the "bad" news wasn't exactly bad. By some measures, the company's profitability slipped a smidge. (Gross margin fell less than 1%.) Now, no one likes to see that. But margins were under pressure because the company sold more of its testing machines, which are lower margin than the supplies it also sells for them. What this means is that the numbers took a small dip now to set the stage for bigger gains later. The actual machines don't have much margin, but the supplies they use are ghastly expensive and carry a nice, fat margin.
Bob: What else do you like about this company?
Andy: Strong profit growth, increasing revenue over time, a great product in a growing market, no debt -- what else do you want? But there's more: Trinity is not a one-trick pony. It can do more than diabetes testing. It is the leader in a number of areas, including its AIDS test approved for use in Africa. All told, this is a bet on the superiority of not just the diabetes machine, but on a grand total of 400 devices. So it adds up to a game-changer backed up by a strong main-line business. Just what the doctor ordered.
Bob: What action should investors take right now?
Andy: Patient investors should put Trinity on their radar screens. I expect some volatility between now and Election Day, and if I'm right, that is when investors need to raise their paddles and put in a bid on these shares.
I'd buy them at any price under $14 per share, and I'd start to experience Pavlovesque salivation at anything less than $13.50. Investors with long-term horizons shouldn't worry about timing -- there's plenty of long-term upside.
Bob: You talked about two other medical device game-changers in your most recent issue. What can you tell us about them?
Andy: One makes a ton of equipment that hospitals simply can't live without, and which is having a serious effect on patient safety. Imagine an IV pump integrated with an electronic medical record. Think about a drug-dispensing machine that is all but guaranteed to be error-free. The other company makes heart pumps, which are the new standard of care for a lot of cardiac procedures. The idea is to let the heart get some rest and heal, letting the pump do all the work. They are both strong companies doing good and doing well.
[Note: In every issue of Game-Changing Stocks, Andy shows his knack for finding the investments that most of Wall Street misses. His most interesting find is an entire asset class that provides retail investors with a backdoor way into the market where Mitt Romney and Bill Clinton made millions. The best part is that all you need is a few hundred dollars and a brokerage account to get in on the action.
To learn more Romney's "secret" market, follow this link.]