Every investment choice is a compromise.  Either you accept high risks in the hope of high gains, or you dial back your expectations and accept relatively small returns in exchange for increased safety.

I don’t think there are any exceptions to this rule.  None.  And if there were, I’m betting that the SEC would probably want to have a nice, long chat with whoever found it.

So my idea for today’s stock is a bit of a compromise.  It isn’t the hottest Chinese stock on the market.  But neither is it a boring Red Chip stock that you have to hold for years to get a good return.

The company is Mindray Medical (MR), which surely has one of the best company names ever.  This Chinese manufacturer of medical devices started out in 1991, making knock-offs of ultrasound and other medical imaging machines.  It took 10 years, but the company concentrated on R&D, and kept finding small, patentable improvements to existing technologies.

It used to be that the only markets for Mindray’s machines were the smaller regional and local hospitals and clinics around China.  But the gradual improvements in both quality control and design coupled with inexpensive Chinese labor soon made the company’s devices attractive to international customers.

Today, China accounts for just 43% of Mindray’s revenue, with the U.S. contributing 16%, and 41% coming from the rest of the world.

Patient monitoring and life support systems are the biggest product line, bringing in nearly half of the company’s sales.  Imaging systems and in-vitro diagnostic products each contribute about a quarter.

Mindray is a great example of a well-run company that has raised itself out of the low-quality, low end of the medical device market.  By spending the money to create intellectual capital, the company has broadened its market.  Q2 results showed a gain of 10% in both revenues and earnings, and the recovering global economy will likely bring back the much bigger gains that characterized 2007 and 2008.

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The chart for MR shows an attractive six-week base at 31 and signs of a breakout in recent days.