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The Female Health Company (FHCO)
CRZO
This maker of female condoms has an unusual business model that relies heavily on funding from government agencies and nonprofits, but the potential payoff could be huge.

The Female Health Company (No. 8) expands its market every time the U.N. and the Gates Foundation spend money on programs to educate women in developing countries HIV/AIDS protection. After years of laying the groundwork, the company is finally reaching critical mass. The World Health Organization and the U.S. FDA endorse its product, and unit sales have grown 30% or more each year for the past three years.

"They are the only one out there with this type of product," says Eric Marshall, co-portfolio manager of Hodges Small Cap Fund. "Down the road, a larger consumer product company, like a Johnson & Johnson-type, could acquire them."

Full story: Reinventing the condom - for women

NEXT: Sun Hydraulics (SNHY)

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Source: From the July/August 2009 issue of Fortune Small Business. Stock picks are valid only as of that date.
LAST UPDATE: Jul 07 2009 | 11:12 AM ET
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