Fonar: A Micro-Cap With 40% Upside

Most people either know someone or have experienced for themselves an MRI scan.

MRI stands for "magnetic resonance imaging". MRI is a procedure used to obtain tissue and skeletal scans for diagnosis of a wide range of potential ailments, ranging from neurological to cardiological to gastrointestinal. The procedure utilizes magnetic fields and radio waves to perform scans, and is considered safer and preferable to CT (X-ray) scans when either can be used.

However, as anyone who has experienced one can attest, the procedure is not exactly enjoyable. Most MRI machines are built in a tunnel-like configuration, where the patient lies flat on his/her back and is fed back into the machine. The result is that the patient must lie in an uncomfortable, confining, immobile position, in a claustrophobic and noisy setting, for 30 minutes or more.

Today's Top Buy pick is looking to change that and improve upon the traditional negatives of the MRI scan.

An Old Name In MRI

Fonar Corporation (FONR) is not a new name in MRI.

In fact, the company's founder (and still CEO), Raymond Damadian, invented the MRI machine back in 1972. Subsequently, he founded Fonar in 1978 and was the first company to ship a commercial MRI in 1980. Fonar held most of the original patents on the technology and successfully collected royalties for many years as large industrials like GE and Toshiba entered the market (it even won a $103 million settlement from GE in 1997).

In more recent times, Fonar invented the Upright MRI, which allows patients to sit, stand, bend, or lay during the scan - even watch television! The result is a much more comfortable, less claustrophobic experience for patients. Additionally, the Upright MRI allows for scanning patients in weight-bearing positions, which can be helpful in diagnosing issues where the pain is acute in certain bodily positions (such as spinal injuries). Even newer "open MRI" systems are not as comfortable or clinically useful.

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Disclosure: Steve owns no stocks referenced here.

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