Under-the-Radar Health Stocks for Today

"Under-the-Radar Stocks" is a daily feature that uncovers little-known companies worthy of investors' consideration. Check in at 5 a.m. every morning to find out about stocks that tend to beat their bigger brethren.

The Vanguard Health Care Index has declined 1% this year as investors are more interested in buying beaten-down technology stocks. The Nasdaq, a barometer for tech shares, has increased 15%.

But some health-care companies are poised for strong revenue and earnings growth. In addition, as the stock market rebounds and credit gets easier, micro-cap health-care suppliers like the two listed below may become acquisition targets.

Allen, Texas-based Atrion Corp.(ATRI Quote) develops and sells products and components for the health-care industry. Products range from cardiovascular to ophthalmology, and the company also makes a line of non-medical components for aviation and marine safety. TheStreet.com Ratings has given Atrion a "buy" rating for two years.

During the first quarter, revenue rose a marginal 1.8% to $25 million, but earnings per share climbed 13% to $2.06. The company managed to improve upon its strong financial position by adding $16 million to the cash balance while retaining its debt-free status.

Looking at peer valuation in the health-care-supplies industry, Atrion is trading at a discount based on earnings, sales, book value and cash flow. With a price-to-earnings ratio of 14.91, Atrion is 27% cheaper than its average peer. The stock, which offers a 1% dividend yield, has increased 22% this year.

Like Atrion, Merit Medical Systems(MMSI Quote) is a top-rated micro-cap. The South Jordan, Utah-based company, which manufactures disposable medical devices for diagnosis, radiology and cardiology, was upgraded to "buy" on May 27 after posting strong first-quarter results. Merit Medical Systems has achieved year-over-year earnings per share growth for nine consecutive quarters.