• Barrons, Monday, October 12, 2009 10:27 PM

Forget buying the ailing BusinessWeek, which has been sitting on the auction block for a while. Now is a rare opportunity to buy the magazine's parent McGraw-Hill at a historically low valuation, when its profit outlook is brightening. Shares of the company fetch 12 times projected 2009 profits of $2.25 a share, and 11 times estimated 2010 earnings of $2.55 a share. The compnay also owns Standard & Poor's, a textbook publisher, four ABC TV stations and some profitable trade publications.

McGraw-Hill's third-quarter earnings release, out later this month, could cheer investors if it shows renewed strength at S&P. The fourth quarter could show a gain in profits compared with a year ago. Another factor: the doomsday prospect of multiple billion-dollar judgments against S&P looks remote.

The new owner, however, would have no reason to keep BusinessWeek. Even if McGraw-Hill gets nothing for the magazine and merely rids itself of the publication and its reported $40 million in annual losses, that could boost profits by nearly 10 cents a share in 2010.

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