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.

September 23, 2008 - Pfizer Inc. (PFE-NYSE) engages in the discovery, development, manufacture, and marketing of prescription medicines for humans and animals worldwide. Its Pharmaceutical segment offers Lipitor for elevated cholesterol levels in the blood; Norvasc for hypertension; Caduet for cardiovascula revents; Chantix/Champix for smoking cessation; Lyrica for neuropathic pain; Geodon/Zeldox, a psychotropic agent; and Aricept for Alzheimer's disease.

The company's Animal Health segment offers parasiticides, anti-inflammatories, antibiotics, vaccines, antiemetics, andanti-obesity agents. It also provides Revolution/Stronghold for dogs and cats; Rimadyl for pain and inflammation associated with canine osteoarthritis and soft tissue orthopedic surgery; Clavamox/Synulox for skin and soft tissue infections; RespiSureOne/StellamuneOne to prevent pneumonia in swine; Bovi-Shield Gold for reproductive and respiratory protection; Dectomax, an injectable and pour-on formulations; Draxxin, an antibiotic for infections in cattle and swine; and Excede to treat infections in dairy cows, beef cattle, and swine.

Pfizer Inc. also has contract manufacturing and bulk pharmaceutical chemicals businesses. It serves doctors, nurse practitioners, physician assistants, pharmacists, hospitals, pharmacy benefit managers, managed care organizations, and government agencies. The company was founded in1849 and is headquartered in New York, New York.

Pfizer's stock has been on a downhill path since the middle of 2007, going from $27.70 to a low fo $11.60 on March 2 of this year. Now it's buying Wyeth. Clearly, the company is aware of its shortfalls and is trying to fill them quickly by buying companies that are strong where Pfizer is weak.

Wyeth will cost $68 billion. The acquisition will be done with $33 in cash and .985 shares of PFE for every share of Wyeth. The new company has several blockbuster drugs in its pipeline (something Pfizer sorely needs) and they'll replace certain Pfizer drugs that will lose patent production soon. Wyeth has well known consumer brands such as Advil and Chapstick. It also owns the depression drug Effexor and pneumonia vaccine Prevnar. Their revenues will be needed to help offset some of the $12 billion Pfizer will lose when its best selling Lipitor goes off patent protection in 2011. This one drug accounts for almsot 25% of all Pfizer sales. Wyeth also brings its research and development group which has been active in biotechnology and vaccines for almost 30 years and is developing new drugs for Alzheimer's disease.

With every merger or acquisition, there's a goal of efficiency, cost savings coming from elimination of duplicate efforts. In the case of Pfizer and Wyeth, analysts look for $4 billion a year in savings as Pfizer has announced it will release about 15% of its work force and close 5 factories. Another cost saver: the dividend has been cut in half, now 64 cents a year. All of that saving will go toward financing the deal.

There is debt needed to finance the Wyeth purchase, about $22.5 billion. Those loans will carry interest rates between 7% and 9%, and Pfizer has to maintain certain credit ratings in order to avoid having the debt called early.

Wyeth isn't squeaky clean. There are several lawsuits still pending against the company. One of them stems from the hormone replacement drugs Prempro and Premarin which over 10,000 women claim cause breast cancer. The other large one is from the fen-phen diet pill which some patients claim contributed to heart damage and lung disease.

More numbers: Trailing P/E is 1.52; Forward P/E is 6. Price to Sales is 1.98 while Price to Book is 1.66. Operating margin is 34.77% while Profit margin is 16.78%. Return on Equity for the last 12 months was 13.1%. Total cash is $23.73 billion. Cash per share is $3.51. Total debt is $17.28 billion (before Wyeth acquisition). Current ratio is 1.6. Book Value per share is $8.52. There are 6.75 billion shares outstanding. Institutions own 68%. Value Line gives the company A+ for Financial Strength.

Earnings for the year should be $1.95, down from $2.42 last year. That's the consensus from 14 analysts that show a range of $1.89 to $2.18. For 2010, look for $2.30 (range is $2.00 to $2.76). For the first quarter, analysts see 49 cents, well below the first quarter of last year when the company reported 61 cents. Those earnings will be announced on April 28. For the second quarter, expect 48 cents vs 55 cents in the second period of last year.

Pfizer has its challenges. But management is being proactive, working on filling the holes in its pipeline and expanding its product line by acquiring Wyeth. While the dividend has been cut in half, the yield is still an attractive 4.7% and requires only 31% of profits to pay.

This is a difficult time for Pfizer, one that started in 2007 and hasn't been resolved. But if the company has another blockbuster drug or two that comes from Wyeth's work and can settle the largest lawsuits satisfactorily, this stock should once again start moving higher.

Company Web site: www.pfizer.com

- Ted Allrich