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 12, 2010 - Tractor Supply Co. (TSCO-NASDAQ) operates retail farm and ranch stores in the United States. Its stores offer a selection of merchandise, including equine, pet, and animal products, such as items required for their health, care, growth, and containment; hardware and seasonal products, including lawn and garden power equipment; truck, towing, and tool products; work/recreational clothing and footwear products; maintenance products for agricultural and rural use; and home decor, candy, snack food, and toy products.

The company owns 948 retail farm and ranch stores in 44 states. Sites are outside large markets in rural communities. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee.

Here's a retailer that showed growth in both revenues and earnings for the last two years. Sales were $3.008 billion in 2008. Last year, they hit $3.207 billion. This year, 19 analysts see totals of $3.53 billion, then $3.86 billion next year.

First quarter got the year off on the right note. Sales jumped to $711 million, up from $650 million. Earnings were 25 cents compared to 1 cent last year in the first period. The better results came from more favorable weather and higher sales for consumable, usable and edible items that were mostly animal feed and pet food. Foot traffic also increased.

Pet and livestock food has become a major offering. The company now has 11 different Purina large animal feed lines as well as 6 varieties of Nutrena. This combination kept the company's current customers and attracted new ones who usually bought these items at smaller, independent feed stores. In the small animal feed, the company introduced a premium private-label dog food which is selling well; so well, the company wants to offer the same brand for cats. Management also pointed out that in the first quarter, sales of its pet hard lines did well, items like toys, treats and containment lines.

The company is seeing a shift in sales. Livestock and pet products were 33% of sales in 2007. Last year, they were 39%. That growth came at the expense of hardware and seasonal items. Management is more focused on products that are used daily, such as consumables and edibles. In 2009, livestock and pet products were 39% of sales, snow blowers and mowers 23%, truck and tools 18%, clothing and footwear 10%, agriculture 6%, and gifts and recreation 4%.

Along with good growth in sales and earnings, the balance sheet is strong with debt less than 1% of capital. Total debt is $1.7 million while total cash is $138.06 million or $3.80 a share. Current ratio is 1.9.

The company wants to expand in the West. Currently it has 24 stores in California and Washington. There were plans for a new distribution center in the West, but they were canceled as the economy faltered. If sales and earnings remain on track, look for the new center to open by 2014. With that in place, expect about 300 regional sites to be added. The company has stated it ultimately wants to be in 1800 locations. With plenty of cash and the ability to borrow at any time, funding expansion will be no problem.

The stock reflects a lot of this good news. Since the low point in the market in March of 2009, the stock has rallied from $28.70 to a recent all-time high of $71.86. It's taking a breather now. In the last 52 weeks, the stock is up 46.12%. But expect to see higher prices as the company delivers continued growth.

More data: P/E ratio is 19.39 while the Forward P/E is 14.47. Price to sales ratio is .73. Price to book is 3.20. Book value is $20.53. For the last 12 months Operating margin was 6.08% while Profit margin was 3.80%. Return on assets was 9.77% and Return on equity was 18.40%. There are only 36.34 million shares outstanding with a Float of 36.08 million. Directors and officers own .70%. Institutions own 99.2% of the Float. There is an annual dividend of 56 cents, just started this year, for a yield of .90%. Value Line rates the company A+ for Financial Strength.

Conservative investors will find a lot to like here: strong balance sheet, good growth in sales and earnings, expansion possibilities. While the stock has rallied significantly over the last year, it has pulled back from its recent high, making for a more attractive valuation and possible entry point. Study it more closely if you're looking for a retailer with a niche.

- Company Web site: www.tractorsupplyco.com

- Ted Allrich