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.

April 28, 2009 - ITT Corp. (ITT-NYSE) manufactures engineered products and related services worldwide. The company's Defense Electronics and Services segment provides systems integration, communications, engineering, and technical support solutions; and research, technologies, and engineering support services to the government, industrial, and commercial customers.

ITT's Fluid Technology segment provides submersible pump systems for water and wastewater control, and biological filtration and disinfection treatment systems for municipal, industrial, and commercial applications; pumps and valves with chemical, paper and pulp, oil refining and gas processing, power, and mining; high-purity systems for biopharmaceutical applications; and valve and turnkey systems for manufacturing processes, as well as pumps, systems, controls, and accessories for water wells; pressure boosters; agricultural and irrigation applications; heating, ventilation, and air conditioning systems; boiler controls; and flood control and fire protection pumps with residential, commercial, light industrial, and agriculture, and turf irrigation applications.

The company's Motion and Flow Control segment offers connectors, interconnects, cable assemblies, multi-function grips, input/output card kits, and smart card systems for defense, aerospace, industrial, transportation, computer, and telecom markets; friction pads and backplates for braking applicationson vehicles; pumps for the marine and leisure markets; valves, actuators, pumps, and switches for the commercial, military, regional, business, and aviation markets; and energy absorption and vibration isolation solutions for industrial, oil and gas, rail, aviation, and defense markets. The company was founded in 1920 and is headquartered in White Plains, New York.

That's a lot of stuff. And much of it is for the military. In fact, Defense Electronics and Services accounted for 54% of 2008 revenues. Fluid Technologies were 33% of sales. The Motion and Flow group added 13%. Of all sales, 32% came from international. Total sales for 2008 were $11.695 billion. For 2009, analysts see a slight dip, to $11.06 billion, and $11.05 billion in 2010.

Earnings will also come down a little this year. Consensus estimate for 18 analysts is $3.58, well below the $4.04 earned last year. For 2010, analysts predict a slight increase to $3.66. Quarterly earnings for first quarter are due shortly and should be 58 cents a share, down considerably from the 91 cents earned last year in the first period. For the second quarter, look for 88 cents a share, again, well below the $1.19 earned last year in the second period.

What makes this stock of interest to conservative investors is its strong balance sheet (only 12% is debt and Value Line rates its Financial Strength at A+), but also most investors view ITT as a defensive stock, not in the sense that it sells to the Defense Department, but that it should not suffer as much as the rest of the market if there's another strong downward move.

Management is going after costs and new customers. It has a 5 tiered program to focus on being a tighter, leaner operation as the macro-economic conditions deteriorate. Customers are the top priority, taking better care of the ones they have and going after new ones with a stronger slaes incentive program. Costs are being cut with most likely consequences being a restructuring of operations. Another area of attention: cash flow and liquidity. With the recent hike in the dividend (now 85 cents annually, up from 70 cents), management appears confident that cash is adequate. In fact, there's $965 million of it sitting in the bank. Another important element: employees, keeping the ones they have so that any revival in the economy can be met with adequate staffing. The company trimmed payroll by 2000 within the last year and some executives had their pay reduced. The last factor, long-term strategies, won't be sacrificed for short-term profitability. Acquisitions are definitely part of its competitive strategy.

The company has suffered from the economic slowdown in its non-military divisions, in fact, more than management expected. Even with a strong backlog, earnings will be weaker this year. However, management believes there will be a defense budget increase this year. ITT's products are skewed toward troop well-being, an area the new administration has emphasized in its recent plans with preference for new troop enrollment over spending on large weapons.

More numbers: Trailing P/E is 9.5 while Forward P/E is 11.2. Price to Sales is .65. Price to Book is 2.45. Operating margin is 11.01% and Profit margin is 6.8%. Return on Equity is high at 22.13% for the last 12 months. Total cash per share is $5.31. Total debt is $2.15 billion. Current ratio is 1.008. Book Value is $16.94. There are 181.8 million shares outstanding. Institutions own 80.6% of them. The next dividend will be paid June 30.

ITT isn't a growth story, for the moment. But it is a defensive one. With a new administration intent on more troops, ITT will sell more products. While the non-military divisions are not as robust as they have been, when the economy recovers, the company will be in good position to capitalize on the opportunities with its strong cash holdings and enough employees.

Company Web site: www.itt.com

- Ted Allrich