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Tickers in this Article: NYT, WPO, GCI, MNI
It may be shocking to consider this, but the truth is the truth no matter how bad it hurts - it may finally be time to start investing in printed newspaper stocks again.

IN PICTURES: 4 Biggest Investor Errors

There haven't been many who have beaten up the industry more than I have since, well, as long as I can remember. Moreover, I'll be the first to admit the irony of the bullish call the day after it was reported that the average person (according to an Ipsos OTX study) now spends more half their time awake interacting with media sites thanks to the still-growing internet, and now fast-growing smartphone ownership.

And yes, that's more time than any of us spend sleeping or working that we're clicking, surfing, watching TV and consuming media.

How in the world can printed versions of newspapers hold a candle to that kind of competition? There's nobody more surprised than I am about it, but the numbers don't lie - newspapers are reliably making money again.

Black Ink's for More than the Presses
If you need some proof of the pudding, you don't have to look very far. Washington Post (NYSE:WPO) made more money in Q2 of this year than it did in Q2 of last year. It also made more money last year than it did the year before. It's still well short of 2006's (and earlier) income, but then again, so too are stock prices for these papers.

WPO is a prime example of said pullback. In late 2004, this stock was brushing $1,000; in August of this year, it was briefly under $300.

Gannett Co. (NYSE:GCI) is another one, tumbling from above $90 in 2004 to under $2.00 in early 2009 - a 98% dip from the high to the low. GCI is hovering around $13 right now, but that's still more than 80% off the peak price. The McClatchy Co. (NYSE:MNI) is the most painful one of all though. At the current price of $3.85, it's still 95% off its peak level.

What's that got to do with getting back in the black? A lot, if you're a value seeker.

See, Gannett and McClatchy are both sporting single-digit P/E ratios now - looking back and looking ahead. Though not quite as impressive on the valuation front, The New York Times Co. (NYSE:NYT) is still sitting on a decent trailing P/E of around 12, and has topped estimates in four straight quarters. It's also on pace to finally grow earnings again after a couple years of declining income.

Even Washington Post shares are still trading at an earnings multiple in the mid-teens, with a projected 2011 P/E around 20.0 Having topped estimates in three of its last four quarters though, the forecasted earnings may simply be too pessimistic given the industry's recent revival; all the major newspaper are on track to actually grow income again this year.

Take it at Face Value
Nine times out of ten, trying to make sense of why the market did something - or why it's doing something - is like putting a jigsaw puzzle together with the pieces facing down. In this case though, I suspect the obvious answer is also the right one: investors assumed the absolute worst, and though things got close to there, the newspaper companies staved off death long enough to figure out a new winning formula.

Now, with net profits under their belt again, the fact that investors overshot with their pessimism translates into values for investors who accept facts rather than argue them. Stranger things have happened. Indeed, the fact that very few people think this revival could have happened just makes the opportunity that much juicer. (For related reading, take a look at Buy When There's Blood In The Streets.)

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