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Newspaper Publishers Can’t Wait Longer for Better Times

Industry wide ad revenue in the larger print segment declined 30% to $6.2 billion in the second quarter. Even the smaller online-only segment has not been immune to the recession. According to the NAA, online-only ad revenue fell 16% to about $650 million.

Against the backdrop of shrinking demand for products and services, employers grew reluctant to increasing head count. Job recruitment ad revenue declined 66%, the highest among classified categories. Ads in troubled sectors like real estate and autos fell 46% and 43%, respectively.

Newspaper Stock ReturnsNewspaper publishers like Gannett (GCI) and New York Times (NYT) derive more than 50% of the sales from ad revenue. Washington Post (WPO) too is exposed to ad sales. WPO is however better diversified as 50% of the company’s revenue comes from educational services provided by its Kaplan unit.

Against this miserable advertising scenario, it is hardly a surprise that newspaper stocks have suffered massive declines. GCI and NYT shares have seen nearly 52% and 38% of their value wiped out over the past year while WPO shares are down 25%. These stocks have underperformed shares in the consumer discretionary sector where the Consumer Discretionary Select Sector SPDR (XLY) is down 12%.

With the economy showing signs of leveling off and providing hopes of recovery, newspaper publishers can hardly wait longer for better times. The second quarter data from the NAA has a silver lining. With the exception of real estate, classified ad sales declined less in each category during the second quarter compared to the first.

 

Must-read Articles on Sector Investing

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

High-potential diversified portfolios can be constructed by dividing assets among a group of sector funds. This approach gives the investor flexibility to over-weight or under-weight certain sectors versus broadly diversified indexes. 'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.' If all of this sounds confusing, you are not alone.

Sector Mutual Funds: How to Pick Winning Sector Funds and Avoid Losers

If you are looking to earn great returns from the stock market sector mutual funds are right up your alley. Sophisticated investors recognize the potential sector mutual funds offer and know how to make such funds work for them. You can consistently beat the market by investing in the right sector mutual fund at the right time. In fact, you can make money even in bear markets.

Sector ETFs: Invest in the Best Sector ETF Consistently

Sector ETFs are among the most potent investment vehicles that allow individual investors to exploit advantages previously available only to large institutions. You can beat the market by investing in the right sector ETF at the right time. In fact, you can actually make money even when the overall market is tanking. However all too often, investors use sector ETFs inappropriately and get their fingers burnt.


New ETF and Mutual Fund Recommendations

The Fidelity and ETF Core and Focus model portfolios have gained at annualized rates of 15.0% and 18.3%, respectively since 1994. The model portfolios will be repositioned with new mutual fund and ETF recommendations on Tuesday, March 31. Learn more about AlphaProfit's Free and Premium Service investment newsletters.


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