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.

July 7, 2009 - Lancaster Colony Corp. (LANC-NASDAQ) engages in the manufacture and marketing of consumer goods in the United States. The company operates through two segments, Specialty Foods, and Glassware and Candles.

The Glassware and Candles segment offers candles, candle accessories, and other home fragrance products in a range of sizes, forms, and fragrance in retail and mass merchants, supermarkets, drug stores, and specialty shops. It markets its products to commercial markets, including restaurants, hotels, hospitals, and schools. Lancaster Colony Corporation was founded in 1961 and is based in Columbus, Ohio.

That headline is correct. This is one of the rare stocks hitting all-time highs. That was on May 9 of this year when the stock traded at $48.92. It's off a little from that but holding. The 52-week low was touched on November 21 of last year at $26.01. That's a pretty fast recovery, signalling that investors think there are better times ahead for this company.

The stock's rebound is not a coincidence. After disappointing investors last year with a dip in earnings, it seems the company will report stellar, record breaking earnings this year. In 2008, earnings per share (eps) were $1.64, down noticably from the $2.05 recorded in 2007. This year,
the 3 analysts covering the company have a consensus estimate of $2.75, then next year, they predict $3.03. In the most recent quarter ended in June, they show a consensus of 77 cents a share, well above the 37 cents reported last year int he final quarter (fiscal year ends June 30). For the first quarter of next year, look for 66 cents, again well ahead of the 39 cents for the first period of 2008. For the third quarter eps were 76 cents, almost triple the 27 cents for the same quarter in 2007.

Improved earnings are coming from price hikes that are sticking. While volume will most likely be about the same for the near future as customers cut back on some food purchases such as fruits and vegetables as well the dips for those staples, analysts expect commodity prices for food ingredients used by Lancaster to be significantly lower this year. Also, the candle side of the business will most likely see lower paraffin prices, a main ingredient for candles.

One major reason conservative investors will want to look at this stock is its balance sheet. It has only $15 million in debt or about 4% of total capital. It's cash position is $19.3 million as of the latest quarter's report. So making interest payments isn't a concern here. Neither is refinancing maturing debt. Nor higher interest rates.

Another trait conservative investors will like: dividend hikes. The company has pushed up dividends every year for the last 46. It will most likely raise it again this year as its cash flow and earnings can easily handle one. The current annual dividend is $1.14, making for a yield of 2.6%. That takes only 39% of projected earnings to pay.

More numbers: Not only is debt low in this company, but the insider ownership is very high, at 34.63%, always a good sign. Institutions own 50.3% of the shares. While the trailing P/E is 21.45, the forward P/E is 14.6. Price to sales is 1.21. Price to Book is 3.32. Operating margin for the last 12 months was 10.27% while Profit margin was 5.62%. Return on Equity was 18.73%. Total revenues for 2008 were $981 million. For 2009, expect $1.050 billion, then $1.085 billion next year. There are 27.98 million shares outstanding with a float of 25.61 million.

Take a closer look at Lancaster if you're looking for a specialty retailer. While there doesn't seem to be a connection between candles and specialty foods, at least the company no longer has the automotive accessories division.

Company Web site: www.lancastercolony.com

- Ted Allrich