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.

October 20, 2009 - Allergan Inc. (AGN-NYSE), a multi-specialty healthcare company, discovers, develops, and commercializes specialty pharmaceutical, medical devices, and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatological, breast aesthetics, obesity intervention, urological, and other specialty markets worldwide.

The Medical Devices segment offers a range of medical devices, such as breast implants for augmentation, revision, and reconstructive surgery; obesity intervention products, including the Lap-Band System and the BIB BioEnterics Intragastric Balloon; and facial aesthetics products. The company also offers Contigen for the treatment of urinary incontinence due to intrinsic sphincter deficiency.

It sells to drug wholesalers, independent and chain drug stores, pharmacies, commercial optical chains, opticians, mass merchandisers, food stores, hospitals, group purchasing organizations, integrated direct hospital networks, and ambulatory surgery centers, as well as to medical practitioners, including ophthalmologists, neurologists, dermatologists, plastic and reconstructive surgeons, aesthetic specialty physicians, bariatric surgeons, pediatricians, urologists, and general practitioners.

Allergan, Inc. has strategic research collaboration agreements with ExonHit Therapeutics S.A.; Spectrum Pharmaceuticals, Inc.; and Pieris. The company was founded in 1948 and is headquartered in Irvine, California.

Earnings per share have grown notably since 2002 when they were 76 cents a share. The following years were $1.14, $1.39, $1.78, dipped to $1.51 in 2006, then rebounded to $1.86, followed by $2.57 last year. This year, the consensus of 22 analysts is that earnings per share (eps) will be $2.75, then $3.09 in 2010. For the last 5 years, earnings improved at an average annual rate of 15.64%. For the next 5, they see 13.28%. Quarterly earnings are due on October 29. Estimates are for 70 cents a share, up from 65 cents in the third quarter of last year. For the fourth quarter, expect 75 cents, a little below the 76 cents of the fourth last year.

Botox is losing some of its appeal probably due to the economic times as consumers aren't as apt to have elective procedures like wrinkle treatments. They usually aren't covered by insurance. Botox is the company's best selling drug. To compensate for slower sales, management reduced expenditures for Research and Development as well as other variable expenses which increased operating margins which should continue. If you believe the economy will recover nicely in 2010, then you won't be surprised to see Botox sales improve right along with it.

Allergan introduced a new drug recently, one that has a potential $500 million market when it fully realizes its potential, most likely by 2014. It's called OZURDEX which treats macular endema following retinal vein occlusion, a major cause of blindness. Another new revenue source will be the use of Botox for chronic headaches or migraines. It will be used as a prevention of migraines, a first. Application to the FDA is in and approval may come by the middle of next year. Market estimate for the drug is $1 billion, possibly reached by 2014, if approved.

The balance sheet is rock solid with $1.388 billion in cash in the bank. Total debt is $1.48 billion or 25% of capital.

More numbers: Trailing P/E is 33 but Forward P/E is 19. Price to sales ratio is 4.10. Price to Book is 4.05. Book Value is $14.29. Operating margin was 22.15% in the last 12 months. Profit margin was 12.77%. Return on Equity was 13.24%. Total cash per share is $4.56. There are 304.06 million shares outstanding with a float of 303.15 million. Institutions own 90.9% of the stock. There is an annual dividend of 20 cents for a yield of .30%.

Conservative investors will like what they see in this stock: strong revenues with good diversification, 2 new markets about to be entered, lots of cash in the bank, better than average operating and profit margins. While the stock is knocking on the 52-week high, it still isn't near the $70.40 the stock reached in early 2008 (numbers are adjusted for a 2 for 1 split in 2007).

- Company Web site: www.allergan.com

Ted Allrich