Citigroup's (NYSE:C) decision to sell its best asset is another indication that our financial system is entering uncharted territory, which is scary stuff. But despite the recession, some companies are continuing to take care of business.

Take filtration company Clarcor (NYSE:CLC), for example. While most companies were doing their best just to survive, Clarcor spent the past 13 weeks growing sales by 11% and raising earnings to $0.56 per share. Its best margins came from its engines and mobile filtration segment.

Clarcor posted its 16th consecutive year of top-to-bottom-line growth. Growing seems to be a common theme in the filtration industry. Competitor Donaldson (NYSE:DCI) reported growth for its most recent quarter, and 2008 marked the 19th consecutive year that its earnings per share grew. Pall (NYSE:PLL) is another filter market rival that started strong in 2009.

 

Trailing P/E

PEG

EV/EBITDA

5-Year Expected EPS Growth

Clarcor

17.4

1.86

9.71

9.3%

Donaldson

14.5

1.22

8.90

11.8%

Pall

14.8

1.03

7.00

13%

Data as of Jan. 15, 2009.
P/E = price to earnings ratio; PEG = price/earnings to growth ratio; EV = enterprise value; EBITDA = earnings before interest, taxes, depreciation, and amortization; EPS = earnings per share.

Must be something in the water
The success of these filtration companies is remarkable. And considering their close ties to the auto parts industry, it's somewhat surprising as well. But the products these companies make are also used by those in industries including oil and natural gas exploration, aircraft, mining, and construction. They have environmental applications as well.

Compared to the other two, Clarcor doesn't use a high degree of financial leverage to generate EPS growth, which is refreshingly conservative. Another of Clarcor's strengths is its ability to consistently generate positive free cash flows, and its gross cash from operations almost never falls below net income.

Investors can take comfort in the fact that as long as there is a need for energy, transportation, and clean water, filters and filtration systems will be in demand -- and companies like Clarcor will continue to turn that demand into profits.

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Chris Jones has neither long nor short positions involving any company mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy admires raindrops on roses.