[Blue light specials? 10 stocks with extra-low P/Es]
Here's a story that could lift Gannett's shares higher on Monday: Influential weekly Barron's includes GCI in a new story about 10 of the cheapest stocks in the S&P-500 -- a group comprising the best-known names in business. By cheap, Barron's doesn't just mean low-priced: These are stocks with unusually low price-earnings ratios, or P/Es.
Gannett is the only newspaper publisher mentioned by writer Andrew Bary in the story (paid subscription generally required) in tomorrow's print edition. "All 10 are valued below seven times future earnings, and some now trade at or below book value,'' Bary says.To be sure, buying stocks with low P/Es doesn't guarantee success. "Indeed," Bary says, "many seemingly inexpensive stocks have gotten much cheaper in 2008. Just look at the big losses in the financial sector. Over time, however, low-P/E investing has been a winning formula."
(Another caveat: Barron's was plenty wrong on Gannett once before -- in that Dec. 1, 2003, cover story, back when CEO Doug "McCorky" McCorkindale was playing golf -- err, wowing Wall Street.)
Bary dutifully notes that Gannett's shares have fallen 54% so far this year, to Friday's closing price of $17.43. And that was after a 35% tumble in 2007 -- making GCI "the leader in what may be the most hated market sector: newspapers."
Yet, Gannett's stock already reflects "a lot of bad news," including the recently awful second-quarter earnings. "Gannett is a long way from going out of business,'' Bary concludes. "Instead, it's a highly contrarian investment. Investors get a 9% dividend yield, well-covered by earnings."
Earlier: In bullish week, GCI stock rises 3.3%
[Hat tip, to a Gannett Blog reader -- my mother! -- for pointing me to this story; chart: Barron's]
Fallen 54%? I thought Jim said it fell 70%. Which is it?
ReplyDeleteTara (aka Anon 9:53a),
ReplyDeleteIt does not make a difference. The fucking stock is down far enough that we have lost respect in the marketplace, depreciated 401k's values, and we have no ability to win confidence of the market.
This stock has declined from $80 per share to $15 per share in just 36 months.
The only thing that has happened is that Craig Dubow took office 3 years ago.
Makes me think that Dubow has done a crappy job increasing "shareholder value"
@9:53 am: Looks like you misread this post. The figure Barron's cites is the year-to-date (YTD) change. My figure is the 12-month change. (Also, I wrote "nearly 70%.")
ReplyDeleteDo you think that recommendation was all Barron's idea?
ReplyDelete"Gannett is a long way from going out of business," Bary concludes.
So...five years? Maybe 10?
Why am I not surprise the anti-Gannett whiners find something to bitch and complain about even when someone writes something positive about the company?
ReplyDeleteIf it wasn't so predictable, it would be laughable.
My, my aren't we sensitive this beautiful Sunday afternoon, Anon 12:11 p.m.
ReplyDeleteWhy does it annoy you so much to have people speak their mind? Why must you label people with contrary views as "whiners" who "find something to bitch and complain about?"
How does it harm you if we express views other than the "Gannett is good, Gannett is good" chant coming from corporate (stock performance to the contrary)?
Did you post (at noon) before your morning coffee?
Poor fellow ... tsk, tsk.
This further emphasizes a point I've brought up before -- that by traditional measures, Gannett's stock is not rationally priced. It's not even rationally priced if Gannett was a much smaller company (which, in all honesty, it could become).
ReplyDeleteI finally went in today for 100 shares in my self-directed IRA. That's not much of a bet at Gannett's current stock price, and even if Gannett *halves* its dividend (which I doubt very, very seriously), my investment still will turn over 4.7% a year in straight-up cash, no matter what happens to the principal. And if it tanks...well, there goes not really much money in the grand scheme of things.