After not looking at a Louis Navellier ad for quite a while, here I run across several fun ones in just a couple weeks — we saw his promise of remarkable momentum and a double from his favorite handgun stock, Smith & Wesson, about a month ago (hasn’t happened … yet, to be charitable). And his favorite diet stock is predicted to go gangbusters by Valentine’s Day (and it is, at least, up a bit so far).

Today, even sexier, it’s the promise of a quadruple! Here’s what Louis Navellier says — this time, he’s promoting his Emerging Growth newsletter, which will run you $995/year:

“Grab it Now Before it Declares Another 1,000% Earnings Growth ….

“One of the country’s fastest-growing and least-known medical waste companies is about to declare ANOTHER blow-out earnings period and quadruple investors’ money again

“If you want to grab the next wave of profits, you must add it to your holdings now.

“Here’s Why:

“This company is the market leader in the niche medical waste disposal field for medical and pharmaceutical waste generated outside hospitals.

“The company has already quadrupled investors’ money since January 1st and is about to do this again.”

This is a firm that handles medical waste for pharmacies and doctors’ offices, the little containers that you always see in the exam room — but apparently the revolutionary thing is that they do it by mail … dare we hope, a Netflix for bloody gauze?

Here’s how Louis describes it:

“The company’s government-approved waste disposal by mail system makes it not only easy and convenient to dispose of hazardous medical waste but also comply with all laws—and at significantly lower costs than contracting with a local garbage company and with none of the paperwork.

“As a result, sales and earnings continue to shoot through the roof as the company simply has no real competition in its sector—thanks to its Environmental Protection Agency approval.”

That’s all well and good, of course — but despite what Navellier says there is actually a fair amount of competition in this sector, I’ll leave it to you to decide whether it’s “real” or not. What we need, then, are some specifics about the company to make sure I share the right name with you …

“Registered 1,000% earnings growth last quarter

“Delivered 258% sales growth last quarter

“Handed investors 412% gains year to date

“A market cap of under $150 million

“Environmental Protection Agency approval on a number of disposal-by-mail systems that certify safe destruction of bio-waste.

“One of the strongest buy ratings of any of our stocks, and

“Is about to clobber Wall Street and double investors’ money again—thanks to a number of new laws around the country that mandate disposal of bio-waste outside hospitals.”

He then goes on to have his cake and eat it, too — claiming that only one analyst covers the stock and does it poorly … but that part of the excitement is the company’s ability to beat earnings estimates.

“That’s because nobody—and I mean—nobody is covering this stock that I know of but me. To be sure, there is one advisor who covered this stock—but not very carefully.

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“The last time he covered it he downgraded it—and that was nine years ago! ….

“The company also blew away the analysts expectations with a 23% earnings surprise…”

And he even throws out the names of a few institutional investors …

“Oberweis, Bridgeway and Spartan, along with a number of high-profit boutique mutual funds, have plunked down millions of dollars to grab the next wave of profits.

“And that’s just on the mutual fund side.

“On the institutional side, a number of pension fund managers from the states of Texas and Pennsylvania have, together, plunked down more than $1 million of their retirement funds on this one…”

Of course, the managers of Texas state pension funds probably plunk down $1 million on office furniture and donut deliveries every month, so that number doesn’t sound that exciting — but it is, at least, a clue.

And that’s at least three times as many clues as we really need — but I do so love to have extras, especially on a sleepy December Monday. So who is this fine little toxic waste mailer?

Thinkolator sez: Must be Sharps Compliance (SMED — get a free trend analysis from MarketClub here)

They got their name, as you might expect, from disposal of “sharps” — primarily needles and the like, tossed into those familiar red plastic boxes, but they do also dispose of medical waste, and they do allow for collection by mail.

And the clues are a nice, tidy fit — down to the mutual funds and insitutional investors who hold shares. And institutional ownership of the shares is increasing significantly as of last quarter, which is usually a good sign for a tiny stock. Perhaps more promising, even though the insiders have been significant sellers, is the fact that insider ownership is genuinely massive — I always like to see management own a big slice of the company, even if they are gradually selling off some of their holdings.

The stock has been on a remarkable run, and to all-time highs around $10, this is not a bounceback recovery from the bear market, though they did dip a bit over the winter, this is a stock growing to these heights for the first time. And the earnings did go up dramatically, in the most recent quarter, though four cents to forty cents is not, neat though it sounds, a 1,000% gain (that would be 44 cents — but we’ll give them the benefit of the doubt).

Investors who got in a year or so ago could certainly have had 412% gains, though, as Navellier notes, his investors have something like 80% gains from his first pick of the shares over the Summer — he’ll be the first to tell you that he’s not a bottom feeder, he only picks stocks that have already shown remarkable momentum (and as the rest of us have seen, momentum can take a turn very quickly sometimes).

Still, I like the fundamental story behind this one a lot more than I do Smith & Wesson — the business is dominated by distributors and local companies, the folks who have the little white boxes that sit outside your doctor’s door for collection, so if they can shake that up and get a boost from some regulatory changes, there’s certainly a lot of room for potential growth.

The company says that their product has penetrated less than 1% of the market, so although they’re certainly not the only “sharps by mail” or “disposal by mail” company, they may be poised to be an effective force and pick up more market share anyway … and having access to the public markets for growth financing at a time like this could be a real benefit, most of their competitors are probably small, local and family-owned businesses. And they just got on the GSA schedule, so it will be easier for them to pick up federal business now, which can’t hurt.

As I noted, there isn’t really any analyst coverage of this firm yet — they are very small, with a market cap after this huge run of about $140 million, but after the big bump up in earnings they are very reasonably priced at a current PE of 15. Do note that essentially all of their increase in revenue (a jump from about $4 million to $15 million for the quarter) was driven by a single government contract — it’s a five year contract, so this won’t necessarily disappear next quarter, but revenue recognition and their ability to get other significant contracts will have a much bigger impact than incremental growth in the business, the rest of the incremental increase in sales was largely due to the booming flu shot business last quarter, which obviously created a lot of sharps disposal issues as the swine flu vaccine clinics were rolled out, and that will probably be a big deal this quarter, too.

So the earnings are real, though it’s very hard to guess about how they’ll bounce up and down in the coming quarters and years given the fact that the huge quarterly bump all came from one big contract with an unnamed agency. I wouldn’t count on steady and uninterrupted growth, but it might be worth digging into this story a bit more if you’re the type who likes to gamble with small caps — they have fantastic margins, again thanks in large part to that nice big contract, and if they’re right about the trend for mail-based services like this they’re likely to face significant competition from larger medical supply companies as the market grows … but there is, at least, plenty of room for growth.

Of course, the stock is jumping 10% today thanks to their GSA schedule announcement and, more likely, Navellier’s naming it over the weekend for his subscribers — and despite the fact that the stock is interesting, I certainly wouldn’t be guaranteeing a double, let alone a quadruple … if the earnings come in significantly below that recent 40 cent mark next time, or the insiders place any more huge share lots up for sale, the stock could absolutely take a hit.

Have you had the pleasure (or pain) of subscribing to Navellier’s Emerging Growth newsletter? Let us know which by clicking here and reviewing it for your fellow investors today — so far my readers rank this one higher than Navellier’s other letters, but that’s not necessarily saying much. Thanks!