Note: Hillenbrand recently fell off the Magic Formula screen after a long run. It is likely just off the screen and could return any day.

Hillenbrand (NYSE:HI) is the parent of its only subsidiary, Batesville Casket. Batesville Casket is the largest casket provider in the United States, and sells other funeral products like urns, funeral home displays, and other funeral services. Batesville has a long and distinguished history of being the top player in the casket industry, with a well established and well-known brand. Hillenbrand as it exists today was spun off from Hill-Rom (NYSE:HRC) in April 2008.

There are a lot of things to like about Hillenbrand. Let's go through the 3 points of investment and see how this stock stacks up: competitive position, financial strength, and growth prospects.

On competitive position, Hillenbrand is very strong. The company has long been the market leader, and today holds about 45% market share of what is estimated to be about a $1.2 billion dollar market. The market overall is a virtual oligarchy: along with York Group and Aurora, the triumvirate controls over 70% of all casket sales in the U.S. (90% are controlled by the top 7). Batesville has significant brand strength and recognition, an important and durable competitive advantage. Given the dominance of a few players and the rather limited and non-dynamic nature of the industry, it's unlikely that any significant new players will come on the scene. Batesville's market position is secure.

Financial strength is also no problem. Hillenbrand has $43 million in cash and no debt. The business is a strong cash producer, running an average free cash margin of 14%, very solid. Operating margin averages around 24%. Returns on invested capital are outstanding: over 30% on a standard ROIC basis, and over 60% using a Magic Formula calculation. Hillenbrand is also one of those Warren Buffett "inevitable" businesses - there will always be demand for caskets, regardless of economic conditions or trends.