The subject of female condoms might make some people blush, but the company responsible for manufacturing them has nothing to be embarrassed about.#-ad_banner-#​

In fact, the Female Health Co. (Nasdaq: FHCO) is doing a public service by making its FC2 condom available to women in 143 countries, especially where preventing unwanted pregnancy and protection against HIV are paramount. To many investors, FHCO is the epitome of a socially responsible investment.

The FC2 isn’t as well-known as its male counterpart, so FHC has leaned on public agencies to help spread the word, allowing internal efforts to focus on production.

Once FC2 gained the FDA’s approval in 2009, FHC was off and running, with ownership of patents worldwide. It first reached out to larger cities where HIV/AIDS infections and sexually transmitted diseases were most prevalent. FHC worked with health care providers and agencies to gain a foothold among the public.

The company also zeroed in on colleges and universities where on-campus organizations benefited from grants to put together programs that helped make the FC2 a household name among young women.

The reliance on public entities has allowed FHC to operate with no debt and high net profit margins — to the tune of 45% last year — and a five-year earnings growth rate of 23.3%.

FHC has cornered the market because competition is limited to three other products, and two of them haven’t yet been approved by the FDA. That leaves the $230 million, 150-employee company clearly in the driver’s seat.

FHC also serves a diverse group of FC2 buyers. The United Nations Population Fund accounted for 62% of sales in 2013, up from 40% in 2012. The U.S. Agency for International Development made up 10%, down from 25% in 2012, and miscellaneous agencies worldwide made up the difference.

But what practically guarantees its sustainability through 2020 is FHC’s involvement in a U.K.-sponsored program focused on educating some 120 million women across nearly 70 of the world’s poorest countries about the benefits of planning and protection. The more than $4.5 billion in commitments to carry the program to fruition will be directed to FHC. 

That’s Female Health Co.’s story in a nutshell, one that has kept shareholders quite content with a 3.5% dividend (up 40% since its inception), a $3 million share buyback program extended through December 2014, and profit of 52% over two years. About a quarter of the company’s shares are owned by insiders and another 36% by institutions, making it a stable and valuable asset.

Risks to Consider: At $240 million, this is a micro-cap stock with one primary product. It is subject to volatility based on product sales and an average trading volume of just 98,000.
 
Action to Take –> Trading at just shy of $8 a share, FHCO is about 10% below its 200-day moving average and 20% below its 52-week high. I love this stock for its stability, dividend and promising future. Buy it for the income, hold it for the growth.

​P.S. The research team here at StreetAuthority is also bullish on FHCO — in fact, they recently named it one of their Top 10 stocks for both income and growth. You can get this report absolutely free, just by signing up for our premium Top 10 Stocks advisory. You’ll also receive our exclusive report on the absolute best stocks on the market to own in 2014. This annual list of stocks has beaten the market time and time again, including individual returns of more than 900%. To learn more, click here.