When it comes to medical stocks as an investment, there are pluses and minuses.On the plus side: above-average returns historically; generally strong returns on capital; government restrictions on competition and life-saving products. The downside includes: high development costs; high failure rate; never-ending supply of rivals and federal regulations that are tough and unyielding.One thing is clear. If you plan to invest in medical technology, you need to learn the space and perform plenty of due diligence. That will, at least, give you a fighting chance.Related: DIVIDEND YIELD AND YOUR PORTFOLIOSeek InnovationMedical technology is all about the latest and the greatest. New products excite the public and help patients. Improvements on old projects are important but do not typically command a premium price or drive market-share. This involves looking at a company’s product pipeline and R&D efforts. One test is that if a company is spending less than 10% of revenue on R&D, it may not be innovative enough.You Don’t Need A Medical DegreeIt isn’t necessary to know everything there is to know about the field of medicine to invest in medical technology. Experts in the field are often so close to the action they miss the obvious. It’s worth knowing the language and being familiar with diseases and conditions a company’s products treat. Beyond that, examine the business as a business.Know Where A Company IsBy this, you should know where a given company is in its own product life cycle. Startups typically face years of losses and outflows as new products are developed. Opportunities can be had both positive and negative. Once clinical data are out – and positive – the company faces the FDA for a critical thumbs-up/thumbs-down. Following approval comes marketing and sales. Each of these stages has challenges. Know where the company is and how it handles each stage.Products In The PipelineIt’s worth knowing what is still theory and what is in development. Innovations that experts expect in 2018 include the following:Hybrid Closed-Loop Insulin Delivery System. Essentially this is an artificial pancreas designed to help make Type 1 diabetes more manageable.Neuromodulation to Treat Obstructive Sleep Apnea. Sleep apnea impacts 21 million Americans and this implant could be a solution for the 40% of patients who refuse to use a CPAP device.Gene Therapy for Inherited Retinal Diseases. Patients with Leber congenital amaurosis and retinitis pigmentosa (inherited eye diseases) may be able to benefit from this new gene therapy in 2018.Unprecedented Reduction of LDL Cholesterol. LDL cholesterol, also known as “bad” cholesterol can clog arteries. A new type of drug therapy can reduce LDL levels by 75%.Targeted Breast Cancer Therapies. New therapies being developed could lead to the end of chemotherapy as a tool in breast cancer along with increased survival rate.Related: UNDERSTANDING PENNY STOCKSMedical Stocks To ResearchSome analysts like very specific stocks, depending on the medical area, based on not only company fundamentals but how well the company is entrenched, how successful it has been against rivals and where it is development-wise with specific products.In the area of gene editing, stocks that are mentioned included: Editas (NASDAQ: EDIT), Intellia (NASDAQ: NTLA) and CRISPR Therapeutics (NASDAQ: CRSP). For robotic surgery, picks include Intuitive Surgical (NASDAQ:ISRGC) a well-known leader in that space. Finally, cancer diagnostics and RNAi offer opportunities for investment with Illumina (NASDAQ:ILMNC), Foundation Medicine (TSX:FMIC) and Alnylam (NASDAQ:ALNYC) respectively.