Leading supplier of medical devices to niche markets Atrion (Atrion Stock Quote, Chart, News NASDAQ:ATRI) has had it rough over 2020 with sales sliding during the COVID-19 pandemic, but the company is in great shape and investors should be taking notice. So says portfolio manager Brett Girard of Liberty International Investment Management, who argues that the company\u2019s free cash flow is its key selling point. \u201cWe start with a very quantitative approach,\u201d says Girard, speaking on BNN Bloomberg on Wednesday. \u201cWe have 7000 different companies from all over the world and we get the quarterly financial information that\u2019s reported by these 7000 publicly traded companies, and we run 20 different quantitative screens. The first and the most important screen that we run is free cash flow growth.\u201d \u201cIf you're a company that can grow your free cash flow then you have the optionality and the ability to reinvest it back in business in such a way that the business can continue to grow,\u201d Girard said. \u201cAnd is a small company but it has a really strong free cash flow characteristics.\u201d Allen, Texas-based Atrion makes medical products for fields from cardiovascular and opthamology to fluid delivery including IV tubes. The company\u2019s business was hit when elective surgeries were postponed due to COVID-19, as shown in its recent earnings. Last month, Atrion reported second quarter revenues of $38.0 million compared to $40.1 million a year earlier with net income coming in at $8.6 million compared to $9.7 million for Q2\/2019. \u201cThe impact of the pandemic was felt in the second quarter with revenues and operating income lower by 5 per cent and 8 per cent, respectively, essentially the reverse image of the first quarter when revenues were up 5 per cent and operating income was up 6 per cent.\u201d said president and CEO David Battat, in an August 6 press release. \u201cThe current year second quarter saw hospitals suspend elective surgeries to preserve ICU beds and other resources to deal with the anticipated deluge of Covid-19 patients. As a result, sales of our products used in elective procedures were lower by $3.7 million.\u201d But demand for Atrion\u2019s products, which include some new entries to the market this year, could rise as surgeries get back online with the opening up of regulations. Girard said the company\u2019s recent increase in its dividend is a good overall sign of the health of the company. \u201cWith free cash flow there's really five different things that you can do: you can invest in R&D, you can go out and buy a company right \u2014 and Atrion has engaged in a lot of M&A over the last number of years. The third thing is you can pay down debt, the fourth thing is buy back shares and the fifth is pay a dividend,\u201d Girard said. \u201cAtrion has been very, very strong and increasing their dividends over the last number of years,\u201d Girard said. \u201cWe\u2019ve seen five-year dividend growth rate of about 16 per cent and, in fact, they just increase their dividend by 13 per cent.\u201d \u201cSo, it\u2019s a small company but it has a really strong free cash flow characteristics, and that\u2019s something that\u2019s persistent across all the companies in which we invest,\u201d Girard said.