This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"Graham (AMEX: GHM), our top pick for 2009, is perfectly positioned to provide high tech equipment to the coming green tech revolution," says technology specialist Tom Vass in Wall Street Window.
"Graham is a global designer and manufacturer of custom-engineered ejectors, liquid ring pump packages, condensers, and heat exchangers.
"Its equipment is for applications in the petrochemical, oil refinery and electric power generation industries, including cogeneration and geothermal plants.
"Their products are the essential building blocks to the production of every other form of 'green' energy. International sales accounted for 37% and 33% of total sales for the second quarters of fiscal 2009 and fiscal 2008, respectively.
"Our patented technology stock selection method tracks what technology companies are doing with their free cash flow. Total cash flow from operating activities for GHM increased to $19,702,000 in 2008 compared to a year end of $5,193,000 for 2007.
"Our research shows that cash flow and retained earnings are the single greatest sources of growth capital for technology innovation.
"In the case of Graham, capital expenditures for the fiscal year ending March 31, 2009 are expected to be in the range of $1.8 to $2.2 million, of which approximately 33% will be allocated for machinery and equipment, 53% for information technology and 14% for other expenditures.
"An estimated 68% of the fiscal 2009 capital spending is expected to be used for productivity improvements and the remaining 32% for capitalized maintenance and other general purposes.
"GHM sports an EPS of $1.77 and pays a dividend yield of 0.67%. If you buy under $13, to paraphrase Thomas Jefferson, 'you will have a wolf by the ears' and you will need to hold on because you may be tempted to let go too soon."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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