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.

June 23, 2009 - Laboratory Corporation of America Holdings (LH-NYSE) together with its subsidiaries, operates as an independent clinical laboratory company in the United States. The company offers a range of testing services used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease, as well as specialty testing services.

Its customers are physicians, hospitals, managed care organizations, governmental agencies, employers, pharmaceutical companies, and other independent clinical laboratories. As of December 31, 2008, the company operated 36 primary laboratories and approximately 1,600 patient service centers. Laboratory Corporation of America Holdings was founded in 1971 and is headquartered in Burlington, North Carolina.

While most other companies are forecasting a decline in revenues and profits, LH is still growing, with analysts predicting sales of $4.67 billion this year (vs $4.51 billion in 2008) and $4.85 billion in 2010. As for earnings per share (eps), look for $4.88 this year (compared to $4.60 in 2008) and next year $5.41. Not dramatic but still positive. For the next 5 years, analysts see average annual growth of 13.11% for eps and for sales: 7.5%.

The economic slump even affects medical testing, keeping some patients away from testing labs. However, the company's bottom line continues to improve thanks to higher margined services such as genomic and esoteric testing. Also, because of Lab Corp's large offerings in products and services, it should capture more market share in a down economy. With higher sales and efficiencies that come from large scale automated testing, earnings should continue to improve.

The star in LH's galaxy is esoteric testing. By focusing on specialty physicians in the fields of cancer and heart disease, the company can offer tests that most competitors can't. Because these diseases are so severe, testing for them, especially when recommended by a physician, is not optional. Even in tough economic times, patients will find a way to pay for these services.

With plenty of cash, the company has been buying back debt. In the latter part of the second quarter, it redeemed about half of its convertible debt with $289.6 million. It still shows almost $375 million in cash after the purchase.

More numbers: Trailing P/E is 15.52 while the Forward P/E is 12.13. Price to Sales is 1.59. Price to Book is 3.98. Operating Margin for the last 12 months was 19.42% while Profit Margin was 10.25%. Return on Equity was a remarkable 26.53%. Cash per share is $3.45. Total debt is $1.71 billion and is 37% of capital. Current ratio is 2.03. Book Value per share is $16.79. Institutions own 99% of the float which is 108.3 million shares. Insiders own .22%. There is no dividend.

While Lab Corp's stock price has suffered in the last 8 months as has most of the market, it hasn't been hit as hard as most stocks. With a wide spectrum of testing, its revenues should continue to grow, and with a focus on specialty testing, its profits should grow even faster as higher-margined services make up for the lack of volume in more basic tests. When the economy does improve, LH should improve sales and earnings at even better rates as all services will be fully utilized.

Company Web site: www.labcorp.com

 Ted Allrich