The fifth company in my series of the top 25 stocks for the NEXT 25 years is Kyphon (NASDAQ: KYPH). Kyphon is headquartered in Sunnyvale, California and was founded in 1994. The stock is hovering around $45 today and carries a market capitalization of $2.0 billion. Kyphon is the leading company in serving the medical community with several products dealing with spinal fractures and other spinal issues.

Kyphon's products are all Food and Drug Administration (FDA) approved and currently sold to hospitals and physicians world-wide. Kyphon manufactures a minimally invasive surgery (MIS) line of products to treat spinal fractures. The leading cause of spinal fractures is osteoporosis. There are over 700,000 new diagnosis of osteoporosis annually in the United States alone, with a similar number for the rest of the world. The MIS techniques that Kyphon's products facilitate allow surgeons to treat the fractures by placing a "bone cement" between the vertebrae thus relieving pain and suffering almost immediately.

Kyphon's spinal products also help physicians treat cancer patients. The biopsy products allow physicians to access suspected afflicted bone samples for diagnosis and possible treatment. What had been a difficult, very invasive procedure is now performed with an incision measuring about a half to a full inch. Patient discomfort is therefore minimal.

Kyphon manufactures a series of products to help physicians treat trauma victims quickly and accurately. The MIS techniques allow doctors to not be as hesitant as they once were in dealing with spinal injuries. From diagnostic products to treatment options, Kyphon has the spinal sector fully covered.

Kyphon sells its products with a direct sales force. The company is endorsing revenues of $580 million and earnings per share of $1.10 for 2007. For 2008 the company expects to do revenues of $725-730 million with earnings per share of $1.75. Both revenues and earnings are growing tremendously. The operating margin for Kyphon is almost 15%. As the company matures, the sales and marketing costs should come down thus providing the leverage for operating margins to expand to 25%+. Mature medical device companies normally have operating margins in the mid to high 20's%.

Kyphon does have competition from Medtronic (NYSE: MDT) in the spinal sector, but Kyphon dominates with market share of over 50%. (Medtronic is the leading cardiac device company in the world.) Kyphon plays well to the demographics in the United States. As baby boomers age and people live longer in general, the risks associated with osteoporosis can be significantly reduced using Kyphon's products and MID surgical techniques.

Kyphon has the opportunity to grow to $100-150 billion market capitalization over the next couple of decades. The spinal market is huge and growing. The potential is a win-win, for patients and Kyphon shareholders.