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.

February 6, 2012 - Wal-Mart Stores, Inc. (WMT-NYSE) operates retail stores in various formats worldwide. The Walmart U.S. segment offers meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, and floral and dry grocery; health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, and seasonal merchandise; fabrics and crafts, stationery and books, automotive accessories, hardware and paint, and sporting goods; pharmacy and optical services; shoes, jewelry, and accessories, as well as apparel for women, girls, men, boys, and infants; and home furnishings, housewares and small appliances, bedding, home décor, outdoor living, and horticulture products through discount stores, supercenters, and neighborhood markets, as well as through walmart.com. This segment also provides financial services and products comprising money orders, wire transfers, check cashing, and bill payment.

Sam's Club offers merchandise comprising hardgoods, softgoods, and selected private-label items under the Member's Mark, Bakers & Chefs, and Sam's Club brands through warehouse membership clubs in the United States, as well as through samsclub.com. It operates stores in the United States and Puerto Rico, as well as in Argentina, Brazil, Canada, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, the United Kingdom, China, and India. The company was founded in 1945 and is based in Bentonville, Arkansas.

It was exactly one year ago today that we featured Wal-Mart. The stock was trading at $56 a share. The dividend yield was 2.1%. Now the stock is at $62 and the yield is 2.4%. Three years ago, the stock was at $46 a share with a 2% yield. Notice the trend here. Can it keep going?

Most likely it will. Nothing fast. Nothing fancy. Just a steady, solid climb as this behemoth of retailing keeps churning out earnings, ever higher. There's nothing in the current tough economic times that suggests things will get tougher for WMT. In fact, these times are when consumers flock to their local Wal-Mart to save money and buy essentials.

Earnings should have finished 2011 at $4.49 (fiscal year ended January 31) according to 22 analysts who follow the company. That's up from $4.07 in 2010 which was ahead of '09's $3.66. In fact, WMT delivered better earnings every year since 1995, as far back as my data go, when they were 60 cents a share. Most likely they've improved even further back. The earnings report for the final quarter and full year will be announced on February 21. Expect the fourth period to show $1.45 compared to $1.34 in 2010's last quarter.

There is competition, however. Consumers are shopping at "dollar stores". Furthermore, management decided to stop selling certain underperforming brands. But it found out that those brands had loyal followings. Those customers went elsewhere. Management got the message and brought back 10,000 items. That puts the store back in the "one stop shop" category and should increase foot traffic and sales.

Lower prices can only come from cutting costs, both from manufacturers and the stores. Management will continue to lower its costs and raise productivity. Ways of lowering costs include reducing product acquisition expenses by way of better vendor relationships, direct sourcing and better in-store efficiencies.

Those cost cuts can't come soon enough as inflation showed up in the third quarter, raising merchandise expenses at the wholesale level 4%. Management only passed along 70 basis points of that rise to consumers as prices nudged up. There wasn't much room for more since customers were already trading down to private label brands, buying smaller packages, or stopped buying certain items altogether, all signs that they were stretching their budgets to take home as much as possible for as little as possible.

Conservative investors will like several elements of WMT. One, its financial strength is rated A++. Second the dividend increases every year. Just like earnings, that's its history since 1995 when it was 10 cents. Last year, it was $1.46, well above the $1.21 of 2010. Expect a bump this year as well. Third, the beta is only .34. That means relatively smooth pricing during turbulent times. While the stock has never been one to rocket higher, it's also never had a severe drop, even in March of 2009 when the rest of the market went spiralling lower. There's something priceless about a stock that doesn't zoom up or crash.

- Essential Numbers:
- Trailing P/E: 13.09
- Forward P/E: 12.6
- Price to sales: .48
- Price to book: 3.17
- Operating margin: 5.94%
- Profit margin: 3.77%
- Return on equity: 23.11%
- Return on assets: 8.56%
- Revenues for last 12 months: $440.14 billion
- Total cash: $7.06 billion
- Cash per share: $2.06
- Total debt: $59.32 billion
- Debt to equity: 82.66%
- Current ratio: .88
- Book value per share: $19.54
- 52 week change: 10.63%
- Total shares outstanding: 3.42 billion
- Float: 1.78 billion
- Held by insiders: 49.74%
- Held by institutions: 31.3%
- Last dividend date: 1/2/12
- Ex-dividend on: 12/7/11

WMT has some high numbers, good and bad. The price to book and the debt to equity numbers may cause some to pause. But the return on equity as well as the history of improving earnings is enviable. And the stock is trading near its high for the year, reached on February 1 of last week. But there's a reason for that. Investors will pay up for company that consistently delivers.

- Company Web site: www.walmart.com

Ted Allrich