With hardbacks, paperbacks, glossies and online services, McGraw-Hill (MHP) has the publishing sector covered. One of the world's largest printers of textbook and educational materials, McGraw-Hill also runs successful financial and business information units.

About half of McGraw-Hill's sales come from its education offerings. But as cash-strapped states tighten their budgets, this segment's progress has slowed considerably. The firm's growing financial services segment, however, has lifted the company's prospects overall. In the last quarter, sales in the unit rose 15% over the same period last year. With a diverse product line and an arsenal of respected brands, including Standard & Poor's and Business Week, McGraw-Hill has boosted its net profit nearly 30% in the past two years.

McGraw-Hill also handles its finances well, says Morningstar. The company has been using its increasing cash flow to reduce debt and increase share repurchases. Overall, the firm's top line has averaged 10% annual growth over the past decade.

Shares trade at 20 times 2004 consensus earnings estimates of $3.48 per share. Analysts expect double-digit earnings growth over the next three to five years.

--Erin Burt

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