TSC 21: Is Recovery on the Fall Lineup at Belo?

Outside of ad revenue, investors should keep a close eye on expenses because nearly all of these newspaper companies face not only the rising cost of newsprint, but also rising medical and pension costs for employees. In order to take full advantage of the hypothetical ad recovery, look for companies to address this important issue, given that newsprint prices are expected to increase 10% in 2003.

Companies could get a boost from political advertising heading into the 2004 presidential election. While it's impossible to predict how candidates will spend their money, look for analysts to ask questions about this potentially lucrative part of the business.

Ultimately, investors already know what Belo has to say about its second quarter, thanks to that June preannouncement. But for bulls who believe that the second-half economic recovery is for real this year, analysts say that now is the time to buy into a cyclical rebound before stocks get pricey. Belo's stock is up 6.9% so far this year, trailing the S&P 500 and many industry peers. However, its shares also posted high-teen percentage point gains in 2001 and 2002.

"Investors seem to be waiting on the sidelines to determine whether to be more aggressive buyers, possibly awaiting a number of economic data points," said Michael Kupinski, equity analyst at A.G. Edwards, in a note. "We encourage investors to be aggressive in advance of the second-quarter reports, even though they will likely be disappointing."

>To order reprints of this article, click here: Reprints