Investors got over the "disappointment" that Fortune won't be adding ABSOLUT to its stable when they saw the nearly $9 billion price tag on the deal. The plan to repurchase 15 million shares of its own stock should help keep EPS growth on a solid trajectory over the next several years.

Fortune owns a diverse stable of consumer products ranging from spirits to golf equipment, padlocks, and kitchen cabinets. These different business lines serve as complimentary engines of growth, enabling Fortune to deliver solid profits even when some areas of the economy are faltering.

Fortune Brands has a track record of cruising through past economic downturns, so even though the housing sector is in the bin and the mortgage mess has dragged the U.S. economy into recession, this stock is hardly getting abandoned. At $71.54 currently, FO is down 9% from a year ago. Over the past five years it is still up nearly 60%. Moreover, its dividend payout has increased more than 90% over those five years to $1.68 annualized.

A pricey deal to buy ABSOLUT, coupled with the downturn in the home products business, would have raised concerns about a cut in the dividend, but those worries should ease now. As it stands, FO is yielding a respectable 2.60% on that payout.

Fortune runs three main business lines: home products, golf products, and spirits. All together Fortune rang up annual sales of $8.56 billion last year. Home products account for over half of revenues, but the spirts and golf businesses delivered low double-digit profit growth last quarter to help offset the tough times in the housing market.

Looking ahead, the company is targeting operating income before charges to be up at a mid-to-high-single-digit rate in the Spirits business. Fortune expects the home and hardware market to contract in the low-double-digits, but it hopes to outperform the market at the top line and for operating income before charges in its Home & Hardware unit to be down at a mid-single-digit-to-mid-teens rate. In Golf, Fortune targets operating income to be up modestly.

Over the next five years, analysts expect Fortune to deliver EPS growth averaging roughtly 9% to 10%. For a company with nearly $9 billion in sales, that is impressive growth. Management is active with acquisitions and divestitures to sustain its growth objectives. Two years ago, Fortune spun off its ACCO office products division as a separate company. It's also been very aggressive with spirits acquisitions and the wine business divestiture.

Fortune's family of golf products includes balls, clubs, shoes, and gloves. Fortune dominates the golf ball market with its Titleist and Pinnacle brands. Other Fortune golf brands include Footjoy and Cobra. Sales from this group exceed $1.4 billion annually and grew 7% last year.

The home products business was a star performer during the lengthy housing boom. While it may be a few years before this market returns to growth, home remodeling should support a recovery and eventually this business line will get back on track. Fortune's product lines include faucets by Moen and cabinets by Aristokraft, Schrock, and Omega. Other brands in this division include Master Lock padlocks and Waterloo tool storage products. Fortune beefed up this division further with the acquisition of Therma-Tru two years ago. Therma-Tru is the leading US manufacturer of residential entry doors.

Fortune's distilled spirits brands include Jim Beam bourbon, Sauza (the fast-growing #2 tequila in the world), Maker's Mark bourbon, Courvoisier cognacs, Canadian Club whisky, and Laphroaig single-malt Scotch. Sales for this division grew 10.2% in the fourth quarter, and operating income jumped 22.6%. Margins are attractive in the spirits business, so its focus on expanding this business means that Fortune is becoming more efficient at generating profits.

FO shares trade at a relatively conservative 13 times forward earnings estimates. Fortune's Price/Sales Ratio, at 1.3 is similarly unremarkable--toward the conservative end of the investment spectrum though not quite a value investor's dream. Fortune's annual dividend of $1.68 gives it a yield of 2.60%, adding to the list of reasons investors might find this stock of interest.

Even when one business hits a rough patch, Fortune always seems to have the good fortune of its other businesses carrying the load. That's the beauty of diversity across many industries. Fortune Brands won't land on most stock screening lists for extreme growth or value. It is simply a well-managed collection of market-leading consumer brands, and the diverse nature of its business lines lends a stabilizing quality to its growth trajectory that is unique and attractive. It's not firing on all cylinders with the housing sector in a slump, but times like these are when investors might pick up the prized profit machines at a modest discount.

- James Hale