CHURCH AND DWIGHT

. That's 71 percentage points better than the S&P 500 index. Such a performance might sound surprising for a company whose big sellers include baking soda, laundry detergent, toothpaste and cat litter. But its success has as much to do with improving its margins as with increasing its sales.

Three years ago Church turned 36 cents of each dollar of sales into gross profit. So far this year it has done so with 39 cents. Management figures it can find another penny next year and an extra five to seven cents over time. Some of this will come from becoming more efficient at purchasing raw materials and dealing with suppliers. Much will come from shifting the sales mix to more lucrative products.

Trojan condoms, for example, are twice as profitable as the company's average product, and are posting record sales. And they're still arguably undermarketed. Condom ads didn't hit network television in the U.S. until 2005, 18 years after then Surgeon General C. Edward Koop laid out a case to House lawmakers and executives from NBC, ABC and CBS to permit them. Church & Dwight, whose Trojan brand claims a three-quarters share of the market, figures that condom usage in America is still just 25% of what it should be.

Condom opportunities seem robust in other countries, too. In Canada Trojan's share is just 50%. In China, where cinema knockout specialist Jackie Chan began promoting condom use in television ads this month, and where Trojan recently debuted through a local distributor, premium condoms make up just 5% of birth control. (Most condoms there are government issued.)

New products make more money, too, and Church has plenty of those. Last year it bought Orange Glo International, along with its namesake wood polish, Kaboom tile cleaner and Oxi-Clean stain remover. It has mixed the latter into a new version of its Arm & Hammer laundry detergent. Nair hair remover has been extended to Nair Men and Nair Pretty for teen girls. And a new First Response home pregnancy test kit can be used four days sooner than previous tests. First Response recently replaced competitor E.P.T. as the sole test kit offered at Sam's Club.

Connie Maneaty, who covers the stock for BMO Capital Markets, an investment bank, expects more acquisitions soon. Maneaty points out that the company's ratio of debt to Ebitda (earnings before interest, taxes, depreciation and amortization) stands at 2.3, and is nearing the low end of management's target range of 2.0 to 3.0.

Sales for Church & Dwight are on pace to increase 13% this year. Profits are seen surging 18%. That tops Procter & Gamble's expected profit growth by four percentage points, and Clorox's growth by 14 points. Yet shares of Church are cheaper. They go for 1.7 times trailing 12-month sales. P&G shares fetch 2.9 times sales and Clorox shares, 1.8 times.

The bosses seem to think Church shares are a good deal. The company's chief financial officer has made several purchases of more than 2,000 shares each this year. The chief executive grabbed 2,000 shares in August.

Church & Dwight appeared recently on a screen for safe stocks with promising growth potential. Its shares have traded with far less volatility than the S&P 500 over the past three years, which some see as a sign of safety. (I'm not particularly impressed with the predictive ability of past volatility, but I include the criterion in this screen for readers who are.) More important, the company survived my cutoffs for healthy sales and earnings growth and a modest stock valuation. See the full recipe of criteria for details. Seven other companies made the cut, too. I call this the Foxhole screen because it looks for companies to hunker down with if you're worried about market volatility. You'll find it and other screens preprogrammed on SmartMoney's stock screener.