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 18, 2011 - Forest Laboratories, Inc. (FRX-NYSE) develops, manufactures, and sells branded and generic forms of ethical drug products. Principal products include Lexapro for the treatment of depression in adults and adolescents, and generalized anxiety disorder in adults; Namenda for the treatment of Alzheimer's disease; Bystolic for the treatment of hypertension; and Savella for the management of fibromyalgia.

Forest Laboratories, Inc. sells through independent distributors to physicians, pharmacies, hospitals, and managed care and other healthcare organizations. The company was founded in 1956 and is based in New York, New York.

That's not the only drug with expiration stamped on it. Another top seller, Namenda, will go off patent in 2015. When two best selling drugs expire, management has to do something. That's why the R&D department is so busy. A new drug, Daliresp, a drug that reduces the exacerbation of severe COPD associated with chronic bronchitis, was just approved by the FDA (Federal Drug Administration). There are many others (see above) in Phase II and Phase III.

Of course, looking outside the company is another way to go. FRX is set to acquire Clinical Data this year for $1.2 billion in cash. It has a recently approved drug, Viibryd which treats major depressive disorder in adults. Analysts don't see the purchase being accretive for at least 3 years with an initial hit to earnings of 60 cents in the first year, then much less going forward. Because FRX has no debt, more deals can be done.

Essential numbers: Trailing P/E is 12.97, Forward P/E is 8.44. Price to sales ratio is 2.25. Price to Book is 1.89. Book value is $17.92. For the last 12 months, Operating margin was 26.83% and Profit margin was 17.34%. Return on equity was 14.98% and Return on assets was 11.45%. Revenues were $4.31 billion. There's $3.73 billion in cash for $13.05 per share. In the last year, the stock is up 22.09%. The low was $24.17 and the high was $34.59. There are 286.09 million shares Outstanding with a Float of 283.28 million. Institutions hold 98.7% of the Float. There is no dividend.

Conservative investors should like a number of data points: Low P/E ratio; lots of cash; no debt. But with the company's 2 best sellers going off patent soon, the stock will have a hard time moving ahead. With a strong R&D effort and new acquisitions, however, management is addressing those losses. When new drugs are introduced, possibly a blockbuster, and new purchases of companies and/or its own stock, look for FRX to move back toward its old all-time high of $78.80, set in 2004.

- Company Web site: www.frx.com

- Ted Allrich