There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

March 30, 2009 - Alberto-Culver (ACV-NYSE) and its subsidiaries operate in consumer packaged goods and Cederroth International businesses. The consumer packaged goods business develops, manufactures, distributes, and markets branded beauty care products, as well as branded food and household products in the United States and approximately 100 other countries.

The company also offers adhesive bandages, antacids, salt substitute, dietary supplements, cotton buds, wet wipes, liquid soaps, anti-perspirants and cologne for women, shampoo and shower products, artificial sweeteners, skin care products, detergents, natural pharmaceuticals, and herbal multivitamin products, as well as distributes toothbrushes in Scandinavia. In addition, it sells various skin care products in Poland and eastern Europe.

The company distributes its beauty and health care products through a direct sales force, as well as through independent brokers and licensees; food and household products through retail outlets such as mass merchandisers, supermarkets, drug stores, beauty salons, barbershops, dollar stores, wholesalers, and various stores; and hair care products primarily through mass merchandisers, drug stores and supermarkets, and beauty supply outlets and beauty distributors. It sells its consumer products through independent distributors and licensees to various retail outlets. Alberto-Culver is based in Melrose Park, Illinois.

Here are the most recognizable U.S. names for ACV's products (U.S. sales are 60% of revenues): for hair products: TRESemme, Alberto VO5, Nexxus and Consort. Its skin care products are sold under the brand names of St. Ives Swiss Formula and Noxzema (bought in October of 2008). Food/household lines include Mrs. Dash, Static Guard, Sugar Twin and Molly McButter. So you know Alberto-Culver but maybe as a different, branded name.

The company had a major shift in 2006 when it spun off its Beauty Supply distribution units. That dropped the stock to a price that better reflected the new company, taking the price from $52.60 to $20. The stock has been stuck in a rather close price range since then, bouncing between $20 and $29 for the last 2.5 years. Now it's trading near the lower end of the range.

Earnings have grown since 2007, going from 83 cents a share to $1.05 to an expected $1.36 this year. Next year analysts predict $1.54. The second quarter report is due on April 27 (fiscal year ends in September). Consensus is 29 cents, the same as for the second quarter of last year. Third quarter (results due in July) is expected to show 32 cents, up from 31 cents in the third period of 2008.

Sales are regaining some momentum. They dipped in 2008 to $1.4435 billion, down from $1.5416 billion. This year, the estimate is for $1.47 billion, then $1.56 billion next year. Not very exciting but still moving upward in a troubled time.

The beauty of this stock for conservative investors is the fact that it's a slow growing, consistent stock; that it has a rather tight price range when most other stocks have been battered mercilessly; and that its financial position is extremely strong (more numbers below).

Some factors that will help this year's earnings include lower ad expenditures during this economic slowdown; and increasing demand for TRESemme and Nexxus hair products (no doubt some of it helped by TRESemme's sponsorship of the very popular Project Runway TV series). Also, a new plant in Arkansas is opening later this year.

Of concern, at least in the short run, are commodity costs which should start to lessen soon, start-up costs of a SAP program, and the negative effect of foreign exchange rates as the dollar weakens, particularly against the British pound.

The company is expanding market share internationally with its Nexxus line of hair products. It recently launched Nexxus in Canada, and will make the premium priced product available in Chile soon, a market where Alberto Culver already offers other products. International sales are now 40% of revenues.

ACV has a competitive advantage over most in the highly fragmented hair-care market: lots of cash. Sitting in the bank is $335 million. Behind that is an untouched line of credit for $300 million. This gives plenty of options: keep buying back stock, purchase other companies, raise the dividend. The most likely choice will be to buy another company or two since everything's on sale these days. Its presence in the skin care market is still very small so it may use some of the cash to move more aggressively in that direction.

More numbers: Total debt is $663,000, almost not worth mentioning. Trailing P/E is 9.7; forward p/e is 14.4. Price to sales is 1.51 while Price to book is 1.98. Profit margin for the last 12 months was 15.75%. Return on Equity was 10.15%. Current ratio is a very healthy 3.06. Book Value per share is $11.29. There are 98.06 million shares outstanding with a float of 84.39 million. Insiders own 13.1% of the stock. Institutions have 79.5%. The annual dividend is 30 cents for a yield of 1.3%.

ACV is not for everyone. There's nothing here that will make the stock jump dramatically (or fall hard). There's no near term catalyst that will make a large difference in earnings or sales. But there's plenty of cash with a management that has conservatively used it, making key acquisitions or buying back stock judiciously. Sales and earnings are growing slowly, but the key word is growing, even in this tough economic time. Most conservative investors will want to spend more time with ACV.

Company Web site: www.alberto.com

- Ted Allrich