The schizoidal nature of Wall Street's relationship with newspaper stocks
is probably best illustrated by last week's institution of coverage of four newspaper stocks
by the analysis firm StockCall.
My guess is that it is a bit artificially high at this point -- there are probably just too many contrarian investors in newspaper stocks
right now -- but that it will pace the S&P500 for the next three to six months (they'll both gain about seven-nine percent).
The principal reason that newspaper stocks
did so well last year was that advertising performance was in crescendo while newspaper costs were in diminuendo.
may be able to float on easing comparisons and continuing cost cuts, but don't forget about the debt problem that so many companies are facing, points out Fitch Ratings Managing Director Mike Simonton.
Morgan cautions those interested investing in newspaper stocks
given the "top line challenge" of revenue and generally heavy debt loads.
It's pretty clear that short sellers have dumped a fair amount of newspaper stocks
-- but there is also evidence that much of the market thinks newspaper stocks
are going to fall right back down.
Battered newspaper stocks
that have lost as much as 90% of their value in the last year soared on Wednesday as investors looked on Gannett Co.
Chicago-based Ariel Investments, which has been a long-term and patient investor in newspaper stocks
, disclosed in a regulatory filing Monday that it has substantially reduced its holdings of Lee Enterprises.
In 2000, the question was that if $1000 were invested in newspaper stocks
and $1000 in the S&P500, which would do better?
Gannett's big gain came on a day when newspaper stocks
soared along with the broader market.
The most widely distributed positive story about newspaper stocks
was last Monday's epistle by Dow Jones' Andrew Bary, which was included in the latest issue of the company's SmartMoney magazine (the article was also made available to Barron's subscribers on Saturday and Wall Street Journal web site readers on Sunday).
Debt amassed for growth that never came was erasing still-good operating margins, and had ended Wall Street's love affair with newspaper stocks