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THIRTY YEARS AGO

it was easy to see where America's profits came from. The average company had a book value that was within 5% of its market value. In other words, had you tallied the liquidation value of machines, real estate, vehicles and so on, the amount you would have arrived at was pretty close to what investors were willing to pay for the shares. Today the average company has a book value that's well less than half its market value. Profits come more from ideas and brands than from machines.

That means talented workers are more important to profits than ever, and so the fall of the asset-intensive company has brought the rise of the human resources department. Companies must offer health-care and retirement plans that are attractive but cheap, and they must design pay schedules that incentivize but don't waste. Plans must be tracked to make sure they produce results. Funding risks must be minimized. Regulators must be kept happy. It's enough to make a soda bottler feel like a social services office, and so the work is often outsourced.

Founded in 1878, Watson Wyatt Worldwide is on pace this year to sell $1.74 billion worth of advice on personnel and financial matters. That's a 17% increase from last year. Profit is expected to jump 28%. The company is cashing in on what analysts call a perfect storm of regulatory changes, such as pension reforms meant to prevent Enron-style insolvencies. Through market-share gains and acquisitions Watson Wyatt has become the No. 1 advisor to the world's top three pension markets: America, Germany and Holland. It's also seeing a surge in demand from employers looking for ways to reduce health-care costs.

Watson turned up in a recent search for prospering companies with modest stock valuations and limited trading volatility. Shares go for 17 times this year's earnings forecast. That's reasonable considering the growth. And over the past three years the stock has demonstrated just over a third of the volatility of the S&P 500 index. That's not to say the stock doesn't carry risk. For one, the same regulations that are spurring demand for pension reforms today are turning employers away from such plans in favor of ones where workers make and manage their own contributions, like 401(k)s. That trend will eventually crimp one source of profit. But for now, Watson is growing nicely, and with little cyclical exposure. That is, about three-quarters of revenue come from sources that have little to do with economic growth. One welcome result of that is that while the S&P 500 has lost 10% over the past year, Watson shares have gained 15%.

For more examples of low-volatility stocks see all the recent survivors of our Foxhole screen, so named because it seeks names that seem safe to hunker down with if you're worried about the short-term direction of the market. Run the screen anytime you like using SmartMoney's stock screener and the full list of search criteria.

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See All the Screen Survivors

Data as of June 11, 2008.

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• BJ's Wholesale Has Edge Over Other Discounters

• Sierra Finds Demand for Its Wireless Modems

• Craft Beers Give Restaurant Chain a Leg Up