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Looking through my biotech stock watchlist, I've been noticing that pharmaceutical stocks have been having a great year as a whole. While I believe that the sector is very attractive for investment based on the "health" of the healthcare industry (no pun intended), I've noticed that there are quite a few medical device companies that might make long term buys. Here are 3 companies that caught my interest, and may become additions to my own portfolio in the near future:

Delcath Systems (NASDAQ: DCTH)

Delcath is a medical device company that I was considering for a buy since the start of this year, and unfortunately I've already missed a lot of the upside. DCTH is up 73% YTD. Despite this, I think the company has more upside potential ahead of its PDUFA goal date of June 15, 2013 for CHEMOSAT. Even after its big rally, DCTH's market capitalization is only $160 million. I think this could jump to $200 million or more just with anticipation of the PDUFA action date.

CHEMOSAT is a delivery system that aims to improve the delivery of chemotherapeutic agents to patients with liver cancer while reducing the side effects. This is achieved through isolation of the blood supply of patients' livers, which is then pumped into the CHEMOSAT system itself.

What makes me bullish on Delcath is the potential for adaptation of this device following potential FDA approval later this year due to the adverse side effects of traditional chemotherapeutic regimens. In general, I also think that liver cancer is one of the better indications for companies to target in the cancer space from a financial perspective due to the difficulty in treating it as well as the alarmingly low 5-year survival rate.

PLC Systems (OTCQB:PLCSF)

PLC medical systems is developing a device known as RenalGuard to address a very specific problem known as contrast-induced nephropathy, which threatens patients undergoing particular cardiac and vascular imaging procedures. The toxicity of certain contrast agents is enough to adversely affect the kidneys of 10-20% of at-risk patients, according to PLC's own estimates.

What I find especially intriguing about PLC systems is the valuation of the company relative to the huge market potential of the CIN indication, which could be as high as $500 million in annual revenues. PLC systems has a market capitalization of $12.18 million (Yahoo finance is wrong), and seems to be attracting a bit more attention after its recent $4 million financing.

It's also worth noting that PLC's RenalGuard is already approved in Europe, which is providing the company with some revenue prior to the potential FDA clearance next year. While PLCSF is a very risky play, I think there is massive upside potential if the company plays its card right with the FDA.

Sunshine Heart (NASDAQ: SSH)

Sunshine is another medical device company with a small market capitalization ( ~$58 million) that targets a huge market with its C-PULSE heart assist system. Heart failure has been a very tough indication for medical device companies, although the difficulty factor also reduces Sunshine's competition if it were to hit the market.

C-PULSE has recently begun enrollment for their big pivotal trial for C-PULSE, and results are expected in 2016 according to the FDA. While this is a long wait, I think that SSH might be a decent play on anticipation of these phase III results alone.

It's also worth noting that C-PULSE has already been cleared in Europe, although it (and many other) medical devices have trouble gaining the kind of traction there that they would in the United States. This is something that C-PULSE actually shares in common with both CHEMOSAT and RenalGuard.

Source: 3 Med Device Stocks Looking Very Attractive