This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why You Should Sell Newspaper Stocks

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Lawrence Meyers

NEW YORK ( InvestorPlace) -- There are these little things called "secular trends" that all investors must be aware of.

For example, there is a secular trend toward viewing entertainment on mobile devices and computers, which is one reason why television viewership and the volume of movie admissions have dropped during the past 10 years.

Another secular trend is that people are abandoning newspapers, and for that reason you should sell all your newspaper stocks. The trend is your friend. Newspapers are not trending toward growth. They are contracting. Here's why, and a look at the stocks to sell.

  • Also see: Expect These Four Stocks to Pop This Week
  • Thanks to the Internet, people can get their news whenever they want, wherever they want. Mobile devices are the new instant newspapers: They provide up-to-the-minute news, whereas newspapers provide day-old news.

    Moreover, content providers are entering the field all the time, and a good story can come from anywhere, not just The New York Times.

    And in the case of fabulous blogs that publish stories that do not hew to what I consider to be the left-wing bias of most newspapers, people have started to realize that the truth is out there -- but not in the mainstream media.

    Then you have the convenience factor. It used to be that you went to the bagel store on Sunday and read that bulky newspaper. Now you can go the bagel store and read your iPad.

  • Also see: 3 Dividend Powerhouses With 8%-Plus Yields
  • As a result of these factors, eyeballs have migrated away from newspapers to the Internet. Circulation has fallen dramatically. In the first quarter of 2010 -- just choosing a random quarter -- the Audit Bureau of Circulations showed a 9% drop in circulation. That included a 23% drop in circulation for the San Francisco Chronicle. In the past six months, newspapers saw a 5% drop.

    When circulation falls, advertisers spend their dollars elsewhere. Newspapers are also really expensive to run, whereas Web sites aren't nearly as expensive.

  • Also see: How to Play Big Oil and Get a 9% Dividend
  • How bad is it?

    Washington Post Company (WPO) hit a high of $983 a share in late 2004. It has never come close to that price since, and today shares trade at $330. In its most recent quarter, it reported a 20% drop in ad revenue. Even online revenue was down, by 14%.

    1 of 2

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Only $9.95
    14-Days Free
    Submit an article to us!
    SYM TRADE IT LAST %CHG
    WPO $699.00 -1.24%
    GCI $34.77 0.00%
    MNI $1.37 0.00%
    NYT $13.60 0.00%
    AAPL $129.66 3.60%

    Markets

    DOW 18,024.06 +183.54 1.03%
    S&P 500 2,108.29 +22.78 1.09%
    NASDAQ 5,005.3910 +63.9670 1.29%

    Partners Compare Online Brokers

    Free Reports

    Top Rated Stocks Top Rated Funds Top Rated ETFs