IT CAN CLEAN

your bathroom and your teeth, and also put out fires. It'll make your pool water less cloudy and your fridge less funky. Sprinkle it on your carpets, in your laundry or in muffin batter.

We're talking about baking soda, of course, also known as sodium bicarbonate. We're not chemists, but we can tell you that the symbol for this stuff ought to have a dollar sign in it. A company that turned up in today's Foxhole screen has been selling baking soda since 1846, and last year booked more than $1 billion in revenue. What's more, this company's low-beta shares may be just the thing to fend off the stink of a sliding stock market.

Beta is a measure of volatility that's calculated using a statistical technique called regression analysis. It's most commonly used to compare the volatility of a single issue with that of an index like the Standard & Poor's 500. The index is assigned a beta of 1.0. Stocks with positive betas have in the past risen when the market has risen. The size of the number tells how far they've moved. A stock with a beta of 1.4 has historically risen 40% more than the market. One with a beta of 0.8 has risen 20% less. And one with a beta of -0.2 has fallen by a fifth of the amount that the index has risen.

Beta is often considered a measure of safety. It's not. It's a measure of volatility, and historical volatility at that. It can't predict freak events like earthquakes or the sudden discovery of yet another use for baking soda (Bicarbo-mattress?). The best way to find safe stocks is to look for sound fundamentals and strong profit prospects. Use beta along with several financial-health measures to identify stocks that you'll be glad to own should the market's recent slide continue.

Coffin-maker Hillenbrand Industries is an example of one such stock. In our Jan. 6 Foxhole screen (see "Coffin Up Some Safety Stocks," we noted that the company's low beta, cheap valuation and improving results make it a fine complement to tech-heavy portfolios. In the weeks since then, the Nasdaq Composite has dipped 8% while Hillenbrand has gained 6%.

We turned again recently to our stock-screening tool to exhume some more foul-weather friends. Searching through 8,200 companies, we looked for betas lower than 1.0 and in the bottom quartile for their industries. Each company's projected earnings-growth rate had to be in its industry's top quartile, and each had to have a forward P/E ratio in its industry's bottom quartile. Debt for all of our candidates had to be manageable. See the recipe to the right for all of our criteria. Our search turned up 14 stocks. Let's look at one.

You thought the company we mentioned earlier was Arm & Hammer? Surprise! It's Princeton, N.J.-based Church & Dwight, maker of...OK, it makes Arm & Hammer. But not just the baking soda. There's a long list of Arm & Hammer products, including toothpaste, laundry detergent, deodorant and cat litter (Super-Scoop Clumping or Super Clay, your choice). And Church & Dwight owns plenty of other brands (Arrid, Brillo, Trojan, Nair) and makes plenty of other products (denture adhesive, pregnancy tests, laxatives).

Deodorizers and cleansers bring in 23% of sales, laundry products, 35%, and personal-care items, 21%. That leaves 4% of sales classified as "International" (Nair hair-removers in Canada and Mexico, A&H toothpaste in England) and 17% of sales brought in by various specialty products. That includes potassium chemicals made by the hair-removal division that can be used for computer monitors (we don't want to know why), and our favorite: megalac rumen bypass fat. That keeps cows chipper and chubby while increasing milk production.

Stray baking-soda fact: It combines with acidic ingredients to release gas and make dough rise. Baking powder is baking soda combined with an acidic ingredient. So baking soda is used in recipes that already have acidic things like lemon juice or cream of tartar. And if you're out of baking powder, you can just combine baking soda with a little cream of tartar. But we digress.

Church & Dwight's fourth-quarter sales jumped 7% year-over-year to $286.7 million, but that included $25.2 million from the acquisition of Unilever's oral-care products (Mentadent, Aim, Close-Up). Earnings rose 3% to $15.9 million. Excluding special charges for the Unilever buy and an accounting change, per-share earnings rose to 44 cents from a year-prior 37 cents, and topped analysts' expectations by seven cents. The company has beaten earnings forecasts handily in each of the past four quarters, driving its shares up 40% in the past year, compared with 27% for the S&P 500.

Deutsche Bank analyst William Schmitz believes that earnings gains from the Unilever acquisition will provide "air cover" as Church seeks to increase its 50% stake in its Armkel unit, which sells Nair and Trojan condoms and brings in 24% of revenues, later this year. "We see little downside risk in the Church & Dwight story," wrote Schmitz in a Feb. 9 note. The stock's beta of 0.28 echoes that.

Note, though, that Schmitz is lukewarm on the valuation. "Church & Dwight has done a great job buying orphan brands cheaply and plugging them into its sales-focused infrastructure," he wrote on Feb. 9. "We believe this roll-up story should continue, but any multiple above 20x is too much given the company's limited top-line growth prospects." Church trades at 19.5 times projected 2004 operating earnings. (Schmitz doesn't own shares of Church & Dwight; Deutsche Bank has an investment-banking relationship with the company.)

Looking at the possible earnings catalysts, analysts seem most optimistic about the company's recently introduced EZ Flush cat litter, and two new types of Trojan condoms. In all, they project that Church will increase earnings by 13% annually over the next five years. That gives the stock a price/earnings-growth, or PEG, ratio of 1.50. The average PEG for personal-and-household-products companies is 1.86, and the S&P 500 has a PEG of 1.70.

That's looks like a fair, if not salt-cheap, price. But should the Nasdaq continue its slide in 2004, you'll likely find baking soda easier to stomach than technology stocks.