Prudential's Stock Picks

By: Jennifer Saba Only a handful of newspaper companies' stocks are expected to outperform the broader market this year, according to a forecast published by Prudential Equity Research.

The favorites are Dow Jones and Knight Ridder -- deemed slightly higher in risk but offering the most "attractive operating leverage possibilities" -- and the safer bets E.W. Scripps and Gannett.

Though Dow Jones might seem like an odd choice, given its reliance on financial and technology advertising, the company has invested in other areas. The investment firm likes The Wall Street Journal's increased color capacity, its Personal Journal, the upcoming weekend edition, and its recent acquisitions, including With low expectations for tech advertising, any upward revisions could "pop the shares."

Although Knight Ridder lagged most of the industry in 2004 in advertising revenues before October, the upcoming comparisons should show significant growth. Prudential also likes the realignment of senior management, which it believes "will serve shareholders over the long term."


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