Premium content from Motley Fool Hidden winners from the UK

Our monthly “Best Buys Now” aims to highlight three of our team’s favorite and hottest buys from our growing list of small-cap recommendations to facilitate Fools build their stock portfolios.

Why we like it: “Tristel (LSE: TSTL) is an innovative Cambridge-based healthcare company. Its unique disinfection products are high-margin, quick to deploy and cost-effective. The recent regulatory approval of the DUO ultrasound product in the U.S. allowed it to enter the world’s largest ultrasound market – a significant opportunity that has been a long time coming. Encouragingly, it has already managed to attract a growing number of hospital customers in the US.“The company has also received regulatory approval in Canada for a high-level disinfectant for ultrasonic probes, strengthening its growth prospects in North America. We hope that Tristel will be able to build on its recent progress and ultimately position itself as a global market leader. The opportunity for investors in the company is to accelerate Tristel’s revenue growth and increase its profitability with the emergence of royalties for introducing the product to the North American market.”

Why we like it Now: In the last financial year, Tristel grew sales and profits by 16% and 32% respectively, while maintaining high levels of cash generation. The company ended the year with cash and cash equivalents of £11.8 million and is debt-free. The company intends to obtain income from license fees from the sale of its shares Tristel ULT AND Tristel DUO products in the US – which should potentially be a major source of future sales and profit growth. Earlier this year, the company said its U.S. partner, Parker Laboratories, was doubling its sales force, which should facilitate kick-start growth. Parker thinks “momentum” builds despite encounters “more purchasing bureaucracy than originally anticipated.” The company appears to be closing in on its valuation, and while the recent CEO change may introduce risks, the company expects continued growth in the fresh financial year, while the long-term opportunity still appears significant.