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“Now a surprise announcement – expected in the next few weeks – could send shares of this under-the-radar company skyrocketing….

“You’ve probably never heard of it…

“But one small U.S. company – already raking in revenues of more than $2 billion and showing net profits of over $320 million – is poised to post explosive gains in both sales and profits in the weeks ahead.”

Sounds good, right? This is an ad for the Oxford Club, which is essentially an “entry level” newsletter like any other (meaning, it costs less than a hundred bucks — they’ll charge you $49/year at “half price”), though they bill it as a “club” and their letter is actually called The Communique.

And if you sign up today they’ll send you that special report: Payoff of a Lifetime: A Company That Fights Cancer & Terrorism Too. You’re welcome to send me $49 too, if you like, I don’t have a “special report” for you but I am pretty sure I can identify this teaser stock and tell you all about it, whether or not you choose to pay …

First, let’s try to dig some clues out of this ad, shall we?

Here’s the main pitch for the stock, for the “cancer-fighter” part of their business, at least:

“Those who own the stock could be – in effect – holding a winning lottery ticket. Let me explain…

“1.4 million Americans are diagnosed with cancer each year. And more than 1,500 people in the U.S. die from it every day.

“But this one company is doing something about it. No… not a biotech company hoping to make it through Phase III trials, but rather a medical technology firm whose products are actually killing cancer tumors right now in hundreds of hospitals around the world.

“How? With a new cutting-edge technology only recently unveiled. Just listen to what the experts have to say about this company’s technology:

• “The medical director at the Alta Bates Comprehensive Cancer Center in Berkeley, California says, ‘a quarter or possibly a third of our cancer patient population will soon be undergoing this treatment.’
• “Another prominent doctor at the University of Texas M.D. Anderson Cancer Center says he intends to treat over 1,000 patients a year with this technology. And, he adds, ‘it is very much a part of our future.’
• “And the Professor of Oncology at the University of Michigan, says this breakthrough technology has opened up nothing less than ‘extraordinary possibilities.’

“Yet most folks on Wall Street are still unaware of this story. Few investment firms even follow the stock.

“But it’s just a matter of time before the national media seizes on what’s happening here… and turns this unknown company into a household name. Then millions of individual investors – and their fund managers – will begin shoveling money into the stock.

“When the public finally understands this company is actually killing cancer tumors right now with a success rate as high as 96%, shares of this company will ignite. And, quite frankly, there is no calculating how high the stock will go.”

So that’s the background on the cancer bit — but how do they “defeat terrorism?”

“On a personal level, the biggest threat we face as individuals is a cancer diagnosis.

“But on a national scale, we face a far bigger threat: terrorist acts designed to kill hundreds or perhaps thousands of innocent people. Since 9/11 – and with the advent of the Department of Homeland Security – billions of dollars have flooded into companies with the proven ability to prevent such attacks.

“Incredibly, this medical technology company is doing just that – preventing terrorist attacks – right this minute. And it has a 100% success rate.

“The same breakthrough medical technology that allows this company’s products to see inside your body, also allows inspectors to see through 17 inches of steel.

“According to the U.S. Customs Service, 6 million cargo containers arrive through 361 U.S. seaports each year. Ninety percent of the trade goods brought into the U.S. each year – some 2 billion metric tons worth – enter the country this way.

“And Customs Service officials only open and inspect less than 2% of the containers.

“It’s not hard to imagine at least some of these containers must conceal illegal contraband – even a potential weapon of mass destruction. Yet to physically open each container, extract the contents, and inspect the contents by hand would be time-consuming and unrealistic.

“Not to mention unnecessary. Because this same medical technology company has developed a product that works like a giant airport baggage screening system. And can generate steel-piercing X-rays that see through container walls and allow contraband nowhere to hide.

“At heart, the technology is quite simple. Electronic images are captured and transmitted to a computer monitor at an operator’s station. The machine can scan a full container the size of a tractor-trailer in less than three minutes. In short, it’s practical, efficient and cost-effective.

“The Department of Homeland Security may soon come knocking on their door with a major order. And that would turn this smaller part of their business into something very big.

“If this firm gets a major defense-related contract, the stock would jump immediately.”

OK, so giant X-Ray Machines, Cancer fighting super-gadgets, and throw in a few specifics about their financials — that ought to be enough for the mighty Thinkolator, no? Well, just in case, let’s toss these clues into the hopper, too:

“What’s more, the company was just awarded a multi-million dollar contract for its cutting-edge cancer technology in Sweden. As is common, this award is being legally contested by a competitor… holding up the process. But once it is thrown out of court – which we fully expect to happen soon – the company’s stock could go through the roof. And that’s not even the best part…

“Right now, the company has a rock-solid balance sheet – with $472 million in cash and only $32 million in debt. And one of our top analysts – an expert who came to us from one of Wall Street’s biggest firms – believes an unsolicited takeover offer from Siemens could be in the works. As you may know, practically nothing propels shares higher, faster than a takeover bid.”

Very well — that’s more than enough, this is …

Varian Medical Systems (VAR — click here for a free instant trend analysis of Varian’s stock)

I don’t know about you, but I’d be delighted to be holding a “winning lottery ticket,” though most of the tickets I see are stuck to the wet pavement outside the 7-11 down the street … and there’s nothing quite so depressing as a sidewalk paved with losing lottery tickets. And of course, most of the “lottery ticket” stocks that I write about end up as soggy, stomped-on messes, too.

Will Varian be one of them? Well, unlike many of the tiny teased stocks I write about in this space, Varian’s big (almost $6 billion in market cap) and solid, and profitable (estimated forward PE of about 15). The clues all fit, too, in case you’re checking up on me — they do have a big contract for a Swedish project that is being contested, and the cash numbers are accurate as of the last quarter (they have more cash now, and more debt, but the ratio is similar). And including the last quarter (release details here), they have $2.21 billion in sales and $331 million in earnings over the last twelve months.

They also issued cautious comments about the future in their last earnings release, about three weeks ago, and seemed to sandbag next year’s earnings a bit — they advised investors to expect $2.65-2.75 in earnings for 2010 (their fiscal 2010 starts this quarter), which is, coincidentally, just about what analysts think they’ll hit, and the shares have gone nicely in the weeks since. You can see the earnings conference call transcript here if you’d like more details about their current condition.

Varian does indeed have a line of proton therapy and other radiation machines for cancer treatment that it sells very successfully, and indeed it’s currently got a commanding market share of that market worldwide. Unfortunately (for them), radiation treatment is not a monopoly business — they face competition both from upstart newbies like Accuray and TomoTherapy (I own shares of Accuray personally, it has also been teased many times, often by competitors from the same publisher), and from larger global conglomerates like Siemens and General Electric, and there isn’t a big medical machine maker around who doesn’t appreciate the lucrative nature of the cancer market.

So my quick look tells me that they’re in good shape, they’re growing, they have new products that they can sell to folks whose older proton therapy machines are starting to embarrass them. How about the security scanning market?

The security X-ray business is a very small part of Varian’s work, but it’s certainly true that they might get big federal contracts — of course, in this sector, too, there’s plenty of competition, and everyone loves to sell stuff to the government. And again we have a similar array of competitors — more focused high-tech companies that could be pushing the envelope with new ideas, like American Science and Engineering, OSI Systems and the like, and huge corporations that have been strong players in this business for ages, again like General Electric.

I don’t know much about Varian’s products, other than what I see on their website — I would say that my impression is that they are tough to beat in the radiation oncology space, if only because they offer such a wide array of products and have such a large installed base of users who they can try to upgrade. Unlike Accuray, for example, which sells just the CyberKnife radiosurgery device, Varian sells some competitive radiosurgery equipment, accelerators, conventional proton therapy machines, brachytherapy materials, etc. It might be that their radiosurgery device is not as precise or targeted as Accuray’s CyberKnife (that’s what Accuray would say, I expect), but the wide array of products from Varian probably helps to keep their revenue steady and their market position fairly strong. VAR’s shares have held up pretty well during this “great recession”, they certainly are well off their 2008 highs but the price is about where it was two years ago — versus, for example, a 60% loss for cancer therapy competitor Accuray and a 50% gain for security competitor American Science and Engineering (and VAR has also significantly outperformed GE and Siemens over those past two years).

Does that make it a “lottery ticket?” Maybe, I suppose, though that might be an awfully boring lottery. It doesn’t look to me like it has that profile on either the risk or the reward side — this is not a tiny company, and it has a half-dozen analysts telling us that we should expect about $3 in earnings in 2011 and continued similar performance of about 15% earnings growth for the next five years. Tossing aside the fact that anyone who tells you what a company’s growth rate will be in five years is really just making stuff up, that does at least let us know that this is a company that is expected to grow very nicely, and is arguably priced for at least some of that growth — with, perhaps, a bit of a discount thrown in because investors are still terrified that hospitals won’t be able to afford new multimillion-dollar machines either because of the weakness of the economy or the unpredictable nature of potential healthcare reform.

I’d call it a very solid technology company with a powerful market position in radiation oncology, and I’d bet it would do pretty well over the next several years as they roll out new products and continue to fight for market share around the globe — but I wouldn’t necessarily expect outlandish gains, personally, even if their security X-ray business does pick up some government contracts and grow faster than expected. Of course, I’ve been wrong (many, many times) before.

What do you think? Are you a fan of Varian or any of the other radiation treatment and medical equipment companies (we can throw in China Medical and Mindray, too, and any others you’re interested in), or have another favorite idea you’d like to share? Let us know with a comment below. And if you’ve been a member of the Oxford Club, we’re always looking for more reviews over at Stock Gumshoe Reviews – click here to share your thoughts and let other investors know whether the Oxford Club was worth a subscription (or, of course, you can just read the 25 other reviews we’ve received for The Communique.

Full disclosure: as noted above, I do own shares of Accuray as of this writing. I do not own shares of any other company mentioned, and will not trade in any stock mentioned in this article for at least three day