7 Cheap Stocks Worth Buying

These companies face challenges but have solid balance sheets and positive cash flow.

One downside of the stock market’s big gain in 2009 is that it leaves fewer bargains in its wake. In posting a total return of 27% return for the year (and a stunning advance of nearly 70% since March 9), Standard & Poor’s 500-stock index saw more than 400 of its members gain in price. Still, at 15 times estimated 2010 profits, the market does not appear to be excessively valued.

Investors who caught the big wave are probably too busy tallying profits to worry about the paucity of bargains. But the run-up makes it hard to harvest sizable gains and reinvest the proceeds in issues that are more moderately priced. It’s also a barrier to those who have been out of the market and are looking for a reasonable reentry point. So we sifted through the also-rans, looking for stocks that were overlooked during the past year’s mad rush.

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Contributing Editor, Kiplinger's Personal Finance