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 20, 2010 - Laboratory Corporation of America Holdings (LH-NYSE) together with its subsidiaries, operates as one of the largest independent clinical laboratory company in the United States. The company offers a range of testing services used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease, as well as specialty testing services.

The company's specialty tests and related services comprise viral load measurements, genotyping and phenotyping, and host genetic factors for infectious diseases; cytogenetic, molecular cytogenetic, biochemical, and molecular genetic tests for diagnostic genetics; oncology testing; clinical trials testing for pharmaceutical companies, which conducts clinical research trials on new drugs or diagnostic assays; forensic identity testing used in criminal proceedings and parentage evaluation services; allergy testing; and occupational testing for the detection of drug and alcohol abuse.

Its customers are independent physicians and physician groups, hospitals, managed care organizations, governmental agencies, employers, pharmaceutical companies, and other independent clinical laboratories. As of December 31, 2009, the company operated 38 primary laboratories and approximately 1,500 patient service centers. It has a joint venture agreement with Duke University Medical Center to commercialize biomarkers. Laboratory Corporation of America Holdings was founded in 1971 and is headquartered in Burlington, North Carolina.  You'd never know there was a recession if you focused solely on earnings at LH. They keep going higher, doesn't matter what's happening in the economy. In 2007, they were $4.18, followed by $4.58. They slowed last year but were still better, going to $4.89. This year, 20 analysts have a consensus estimate of $5.50 a share. Next year, they see $6.08. No wonder the stock recently hit an all-time high of $83 a share (on April 21, 2010). Earnings have increased every year since 1999 when they were 30 cents a share.

One of the competitive advantages Lab Corp has is pricing. The company charges less than hospital labs. Look for more doctors to use LH's facilities as health care reform (coming soon) will require lower costs on health maintenance organizations (HMO). That should keep revenues and profits climbing even if the recession worsens.

The future seems bright. Add the above positive elements to the fact that the company is buying back its own shares ($250 million worth was approved in August). This year, the company purchased 800,000 shares or about $57 million before the announcement. That program won't dilute the company's purchasing power to go shopping. Sitting in a revolver credit facility is $430 million out of $500 million available. Taking on additional debt through a bond issue is an alternative for those special, large transactions should management find something they have to have.

All this reads very well. But the stock hasn't reacted to much in the last several years. Except for the market meltdown in late 2008 and early 2009 when the stock went from $91 to $53.30 before heading higher, the stock traded in a rather narrow range, between $65 and $82. Now it's getting toward the top of that again. With all the good news already anticipated, it might take a positive surprise to finally be the catalyst to boost the stock above and beyond the previous high. Still conservative investors should find comfort in the relative stability of this stock.

More numbers: Trailing P/E is 14.6. Forward P/E is 12.53. Price to sales ratio is 1.61. Price to book is 3.50. Operating margin for the last 12 months was 20.41% while Profit margin was 11.72%. Return on equity was a commendable 26.6% and Return on assets was 12.61%. There's $104 million in cash for $1.01 a share. Total debt is $1.33 billion. Debt to equity ratio is .35. Current ratio is 1.02. Book value per share is $21.43.
There are 102.80 million shares outstanding with a Float of 97.07 million. Insiders own 1.7% of the stock while Institutions own 100% of the Float. There is no dividend. The company's Financial Strength is A.

Conservative investors will like a lot about this stock, not the least of which is its ever increasing earnings and relatively stable price range that has an upward bias to it. However, they shouldn't expect any large price increases for a while unless the company does a meaningful acquisition that makes a positive impact to the bottom line. However, continual share buyback will go a long way to keep earnings on their upward trajectory.

- Company Web site: www.labcorp.com

Ted Allrich