Every year, Forbes creates a list of the top 200 best small companies in America. To be eligible for the list, a company must have annual revenue between $5 and $750 million, be publicly traded for at least a year, and have a stock price of at least $5. The rankings are done based on earnings growth, sales growth, and return on equity. Forbes has found that this group of stocks has outperformed the benchmark Russell 2000 of small stocks by about 10% annually.

This list is especially interesting for Magic Formula investors, as a staple of MFI is purchasing small-cap stocks, which are often under-followed and thus inefficiently priced in the market. Taking the Forbes list and pulling out the current Magic Formula stocks could find us some attractive investment ideas from the number of declining businesses or cyclical entities on the screen. Here is a table of current MFI stocks that appear in the top 200 list:

This is a continuation of the series of valuing each of the 200 Forbes Best Small Companies.

In this post, I’ll list the valuation results of companies 11-34 from the stock value spreadsheet. You can also calculate the stock value yourself with the free dcf spreadsheet as well as the free Benjamin Graham formula spreadsheet.

It looks like the economy finally caught up with Middleby (NASD: MIDD) in the second quarter. After their first quarter, it looked as if they could defy the gravity of the economy. In the second quarter, however, sales declined 8.6% and earnings fell from $0.99 per share a year ago to $0.74 per share in the current quarter. This sounds bad, but the sales numbers are actually worse.

Over the past year, Middleby has continued to purchase rivals, the biggest of which was Turbochef. They have used debt to finance these acquisitions. Excluding the impact of these acquisitions, sales fell over 21%. All of this should be expected in this economy. It’s only surprising that these sales declines didn’t occur sooner.