It has been a great start to the new year for the shareholders of Medical Developments International Ltd (ASX: MVP).
The growing healthcare company behind the popular green whistle pain management device has seen its share price rocket 14% this week despite there being no news out of the company.
This week's gain is likely to be attributable to a buy recommendation placed on its shares at the weekend by Patersons Securities as reported in the News Corp media.
I can't say I'm surprised to see the company finding favour with brokers, especially with its shares around 23% off their 52-week high.
I see this as a great price to start a long-term buy and hold investment in a company with enormous growth potential.
In 2016 MDI gained approval for its Penthrox product in countless countries as part of the company's plan to make it the mainstream analgesic of choice around the world.
This looks set to continue in 2017 with the company expected to gain approval for its sale in more than 20 countries throughout Europe. Furthermore, MDI is gathering the clinical data needed to submit a new drug application to the U.S. Food & Drug Administration.
If that wasn't enough, management recently revealed that it has embarked on a clinical program to expand its use into minor surgical procedures. This is a potentially lucrative expansion with this particular market estimated to be worth upwards of $2 billion a year to the company.
As well as Penthrox the company has another weapon in its arsenal. It was recently granted FDA approval for its anti-static space chamber devices used to help patients manage their asthma and chronic obstructive pulmonary disease.
With management confident both products beat the current competition on quality and price, I believe 2017 could be a year of significant growth.
But with its shares changing hands at 117x trailing earnings, an investment in its shares does carry significant risk. Whilst I believe that its growth potential means it is worth the premium, I would suggest restricting any investment to just a very small part of your portfolio.
If it is a little too expensive for your tastes then I would point you to CSL Limited (ASX: CSL) and Mayne Pharma Group Ltd (ASX: MYX). Both companies also have solid growth prospects, but come at more reasonable valuations.
