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.

May 4, 2010 - H.J. Heinz Co. (HNZ-NYSE) manufactures and markets food products for consumers, foodservice, and institutional customers. It offers ketchup, condiments and sauces, frozen food, soups, desserts, entrees, snacks, frozen potatoes, appetizers, beans and pasta meals, infant nutrition, and other processed food products. Some of its brands are Heinz Ketchup, Ore-Ida Potatoes, SmartOnes, and Classico. It makes about 650 million bottles of ketchup a year.

The company also owns or leases office space, warehouses, distribution centers, and research and other facilities. It sells through its sales organizations, independent brokers, agents, and distributors to grocery accounts, convenience stores, bakeries, pharmacies, mass merchants, club stores, and foodservice distributors, as well as to institutions, including hotels, restaurants, hospitals, health-care facilities, and various government agencies.

H. J. Heinz Company has operations in North America, Africa, Latin America, Europe, the Asia Pacific, and the Middle East. The company was founded in 1869 and is based in Pittsburgh, Pennsylvania.

Heinz is one of those solid citizen type stocks. Nothing exciting about it, but it consistently delivers While earnings don't go up every year, the stock offers a good dividend ($1.68 this year for a 3.6% yield) and ever increasing sales. A conservative investor will find comfort here.

Consensus from 17 analysts following the company is for earnings to dip slightly this year to $2.86 a share, down from $2.90 in 2009. (Fiscal year ended April 29.) Next year, they see $3.11. Earnings for the fourth quarter of 2009, out in May, should be 60 cents a share, an improvement of 5 cents over last year's fourth. For the first period, estimates are for 73 cents a share, up from 67 cents in last year's first quarter. Over the next 5 years, analysts see earnings averaging a 6.20% rise per year. In the last 5, they moved ahead by 6.60% a year, on average.

While the stock got hit during the final months of 2008, then bottomed by March of 2009 at $30.50, the price has moved constantly higher, and recently traded at $47.84 on March 19. The stock reached $58.80 in 1999 when earnings were $2.57 a share.

The dip in earnings this year came from the company's strong global sales (54% of 2008's total sales, more than 60% now) and the currency risks that entails. While successful at hedging against it in 2008, results were not as robust in fiscal 2009. Sales were also a little slow (revenues still should show an increase of $500 million to $10.605 billion), and costs were higher in the first 2 quarter of the year. But the last 2 quarter showed the emerging markets sector with solid sales gains and results from a stronger marketing effort were positive in developed economies.

The latter effort will continue as Heinz is determined to keep its market share and grow it in developed countries. Look for more marketing in Europe and the U.S.. New products are also in the pipeline, especially a new ketchup with 15% less sodium which is being introduced by June or July of this year.

The company looks to emerging markets for significant growth, targeting 20% of total sales from these countries by 2012. Currently they supply about 15%. In 2009, this sector grew by double digits from organic growth. One market sector the company is focused on is infant nutrition for China and Russia.

Here's one of the most interesting numbers about HNZ: its return on equity has been growing nicely over the last 6 years: 31.8%-36.6%-43%-44.8%, then 75.7%. This year analysts see ROE at 57%, then 49% next year.

More numbers: Trailing P/E is 17.59. Forward P/E is 15.11. Price to sales ratio is 1.42 while Price to book is 8.13. Operating margin for the last 12 months was 14.97% while Profit margin was 8.13%. Return on assets were 9.59%. Revenues were $10.42 billion. Total cash is $562.3 million which is $1.78 per share. Total debt is $4.82 billion or about 72% of capital. Current ratio is 1.56. Book value per share is $5.77. There are 316.24 million shares outstanding. Insiders own .30% while Institutions have 66.40%. The last quarterly dividend went ex-dividend on March 22 and was paid on April 9. Value Line gives the company an A+ for Financial Strength.

Conservative investors will see plenty of good in this stock, but there's also a few flags, mostly yellow, not red. One is the high valuation for Price to book of 8+. Another is the amount of debt (72% of capital). But considering the history of the company and the strong Return on equity, there seems to be a lot more to like here than not.

- Company Web site: www.heinz.com

- Ted Allrich