5 Magic Formula Stocks for 2009

In January 2008 I wrote about 5 Magic Formula stocks for 2008. Spreading an equal amount in Accenture ( ACN) , American Eagle Outfitters (AEO) , Jackson-Hewitt Tax Service  (JTX) ,McGraw Hill Co.  (MHP),Pacer International  (PACR) would have resulted in a return of roughly 30% or 7 percentage points better than the S&P 500. Four out of the five stocks were down significantly except for Accenture (ACN)  which was even since the mention on January 23, 2008.

Despite its not so great performance, I am still bullish on the magic Formula and thus will continue to follow it and write about it. Its principles are sounds for any market and will be around for centuries to come. So without further to do, here are five magic formula stocks for 2009. Please do your due diligence.

1. ValueClick (VCLK, 6.98), an online marketing services company, currently has a market cap of 600 million and a P/E of 12. It has been beaten down with all tech (and all other stocks) but with a clean balance sheet and positive cash flow, it it poised for a nice rebound. In addition, it has been know that Google might acquire ValueClick (VCLK).
2. KHD Humboldt Wedag International Limited(KHD, 12),is engaged in industrial plant engineering and equipment supply business and has a royalty interest in the Wabush iron ore mine, currently has a market cap of 364 million and a P/E of 5.   The company’s current cash on hand is HIGHER than what the whole company is selling for. Basically, you are getting its earnings power (it earned $1/share last quarter) and the rest of its operations for free .
3. Graham Corp. (GHM,12), designs, manufactures and sells custom-built vacuum and heat transfer equipment to customers worldwide. The company currently has a market cap of 121 million and a P/E of 6. With virtually no long term debt and the company earning money, Graham Corp. figured to come out of the recession without any wounds.
4. Dell (Dell, 10) a technology company, currently has a market cap of 20 billion and a P/E of 7. The company might not be growing as fast a before but it still has 8.5 billion of cash on hand and producing more than 700 million dollars of free cash each quarter.
5. eBay (EBAY, 14) provides online marketplaces for the sale of goods and services, as well as other online commerce, or e commerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses,currently  has a  current market cap of 18 billion and a P/E of 9.  The company has 3.6 billion of cash on hand and is producing  500 million of free cash flow every quarter.