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 10, 2009 - Southern Co. (SO-NYSE) through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in Alabama, Georgia, Florida, and Mississippi. It serves approximately 4,400,000 residential, commercial, and industrial customers over 120,000 square miles. Revenues for 2007 were: residential 34%, commercial 31%, industrial 21% and other 14%. Retail revenues by state: Georgia 52%, Alabama 34%, Florida 8%, Mississippi 6%. Generating power by: coal, 67%; oil & gas 15%; nuclear 13%, water 1%, purchased 4%. Fuel costs were 41% of sales in 2007.

In addition, it holds investments in synthetic fuels and leveraged lease projects. The company was founded in 1945 and is based in Atlanta, Georgia.

No question the economy is hurting Southern Company. Even though the states it serves were doing better than the national economy for a while, that's no longer the case. Analysts have lowered their estimates for 2009 by a nickel to $2.41 (compared to $2.37 in 2008) in the last 60 days, and for 2010, they dropped them to $2.53 from $2.57 in the last 60 days. Still increasing, but at a slower pace. 2010 may see an economic recovery that would help earnings improve over current estimates.

Over the last 5 years, earnings grew by 5.6% a year, on average. For the next 5, analysts see 5.36%. So this is no growth story. Rather, it's a solid utility serving 4 states with a history of profitability. Value Line gives the company an A rating for Financial Strength. And the dividend is $1.68, giving a 6.2% yield. It takes 72% of earnings to pay the payout.

The company is looking to build 2 large generating projects, one in Georgia and one in Mississippi. The Georgia Power unit has requested permission from the state utility board to add on to its 45.7% owned Vogtie nuclear station with 2 new units at a cost of $6.4 billion and 1000 megawatts of capacity. A decision should come this month. Mississippi Power requested a permit for a 580 mw coal gasification plant that should run about $2.2 billion. That decision will be known by the end of September.

The stock's price was $40.80 in the middle of last year, an all-time high. It didn't get hammered too badly in the October-November meltdown, but it suffered, then going down further, reaching a 52-week low of $27.44 as this is written, a new low for the last 5 years.

More numbers: Trailing P/E is 12 while the Forward P/E is 10.8. Price to Sales is 1.27. Price to Book is 1.64. Operating margin for the last 12 months was 20.47% and the Profit margin was 10.17%. Return on Equity was 13.51%. Total cash is $417 million. Total debt is $18.39 billion. Current ratio is 1.025. Book Value is $17.08. There are 777.62 million shares outstanding.

Southern Company is a solid, well established utility serving 4 states. It has increased revenues annually by 2% over the last 10 years and by 5.5% over the last 5 years. Profits were up by 3% a year, on average, in the last 10 years and 5.5% on average in the last 5. Analysts predict sales up by 5% a year over the next 5 and earnings to increase by 5.4% a year, on average in the same time. Slow, steady, profitable growth is the story here. That should have some appeal to most investors given the current state of the market.

- Company Web site: www.southerncompany.com

- Ted Allrich