Seatbelts and airbags don't seem so safe, suddenly. Shares of Sweden's Autoliv (ALV), the world's largest maker of and patent-holder for car safety gadgets, have lost more than half their value in a year. Car sellers are having a famously bad year, and so Autoliv faces worrisome challenges. But its stock seems priced as though mankind were about to forsake automotive travel for walking. Bottom-fishers ought to have a look.

Autoliv's customers include all of the world's car makers you know of and several you don't. Just over half of sales come from Europe and a quarter come from North America. Trends for both are grim. In North America, where car lots were bloated with big, thirsty trucks and sport utility vehicles, light vehicle production fell 15% during the first half from a year earlier. Even in Western Europe, where my last couple of rental cars could have been mistaken for mailboxes, production fell 1%. And Autoliv's key European customers, like Renault and Volvo, have underperformed peers. China has gone from a bright spot to a not-quite-as-bright one; production there was forecast to grow 23% in the third quarter and 14% in the fourth. Now analysts are looking for 14% and 7%, respectively.

At the same time, higher costs for raw materials like steel, aluminum and zinc have crimped profit margins in recent quarters. Autoliv now turns 7.8 cents of each sales dollar into operating profit. That's down about a penny from recent years and two pennies short of the median company in the S&P 500 index.

But really, things aren't so bad. The safety content of cars is increasing, as new gadgets once reserved for posh cars, like airbags, are demanded in cheap cars, too. So Autoliv's sales in its most recent quarter were better than production trends suggest. They fell 1% if we ignore currency shifts and acquisitions and increased 10% if we include them. Sales for all of 2008 using the latter measure are seen rising 7%. Chinese cars in particular seem promisingly unsafe. They hold $100 to $150 worth of safety gadgets, vs. $300 to $400 in the developed world. With China keen on one day being a major car exporter, expect it to close that gap as it grows production.

Autoliv has trimmed staff and re-engineered products to cut production costs. Commodity prices have also begun easing. And the company has focused product development on goods that can help car makers improve fuel efficiency and give customers a reason to buy. This month it has announced a steering wheel made from earth-friendly material, a light airbag that can help cut fuel use and an updated night vision system that alerts a driver to a pedestrian in the road.

Expect only modest financial improvements for now. Earnings per share are expected to increase 5% this year and 7% next year. But Autoliv stock now goes for less than seven times earnings. It carries a dividend yield of 5.4%. Since 2000 the company has repurchased a third of its outstanding shares. It generates a large and growing sum of free cash each year, suggesting the company's dividend and appetite for its stock are secure.

Autoliv turned up recently on a search for companies whose share prices have plunged over the past year and now seem low relative to two things that tend to be even more reliable measures than profits: their sales and the value of their tangible assets. Each of the six screen survivors generates ample free cash, pays handsome dividends and grew sales in the most recent quarter, if only by modest amounts. Use SmartMoney's stock screener and the full list of search criteria to produce a similar list anytime.

Bottom-Fishing Screen Recipe
52-week price change below database median
Price/book-value below industry median
Price/sales below industry median
Price/free-cash-flow below 10
Dividend yield greater than 2%