Sirtex Medical (ASX: SRX)

Sirtex is a company that looks interesting. From my two days of reading, here's what i've gathered. Essentially, the company treats inoperable liver cancer. However, the treatment is only used as a last resort at the moment, For this reason, among others, the company only caters for roughly 1% of the addressable market. The interesting thing however, is that the company has engaged in a massive trial study to test it's efficacy and prove the treatment is indeed effective. The study, called SIRFLOX, is due to report its results in early-mid 2015. If the results are positive, the treatment will move form being a last resort to a first (along the lines of Chemo and radiology). This could  mean big business for the company. The interesting thing is though, who out of everyone would know the likely results? The CEO for one. He has gone and tripled production facilities in many parts of the world to meet "expected demand" because he believes the results are positive. My question is, why the hell would he be building excess capacity at the moment, when the results are not out yet? (The head office is actually very close to where i live. I should just pay Mr Wong a visit. Ha, i wish!)

The stock is definitely not cheap whether you're looking at the in terms of the current P/E or even the forward P/E. If you buy in now, you better be aware that the stock could plummet if the results come out negative (which may become a potential opportunity again, but read on to find out why.) However, the CEO has stated that even if the results come out negative, current growth is sustainable. It could be a possible long-term play if some characteristics change. Some  key fundamental metrics such as margins and ROE and extremely strong. It's also debt-free and has only raised a minimal amount of additional of capital in the past 10 years.On top of this it's generating quite a pleasing result on incremental capital. So it's definitely ticking some boxes. One thing to note is that the FCF's are not very good at all (but is somewhat justified given the growth prospects of the company.)

Hunter Hall, an investment company, has stated the company has the potential to be a $100 stock however it would need to address 10% of the market. This may seem like a dream, but if the results are positive, it could become reality very soon. Roger Montgomery is also looking to get on board. I'd definitely keep a close eye on this one.