Barron's Likes This Cat Litter Company, Oil-Dri Corp of America (ODC)

In a column in this weekend's Barron's it mentioned a few stocks that could still do well in a recession. One of the stocks Barron's keyed in on was Oil-Dri Corp of America (NYSE: ODC). Oil-Dri Corp. of America makes cat litter and other absorbent products like those used in garages and factories.

Barron's think Oil-Dri Corp of America is poised to rise as Americans need to buy their product to prevent the smell of cat pee of spreading throughout cat owners' homes. Additionally, as Americans look to save money, shoppers are likely to look for the cheaper, private-label name in which Oil-Dri Corp is the leader in that market.

There is still more positive news with this story. Despite high energy costs, Oil-Dri's profits have still grown at an annual pace of 15% over the past five year. The fall in the price of natural gas means that Oil-Dri Corp of America margins could expand from the teens toward more normal levels near 25%. Yet shares trade at just 13.5 times 2008 earnings, below the 17 times for household products stocks.

Many are surprised that this small, profitable company has not been gobbled up by a larger company. With oil prices dropping, Oil-Dri Corp of America is one company to pay attention to in '09.

Oil-Dri Corporation of America (Oil-Dri) is engaged in developing, manufacturing and marketing sorbent products.
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