The New York Times (NYT 0.02%) emerged in 1851 with a simple mission: seek the truth and help people understand the world around them. While the mission hasn't changed, the Times has transformed from a small, penny newspaper to a digital mammoth that can add both stability and growth to your portfolio. Here are three reasons to take a closer look at the Times now. 

1. Optionality

The Times is embracing a vast array of digital opportunities, with Times-branded apps and online access from games and crossword puzzles to recipes, product reviews, sports, and yes, news and advertising. This multiple-streams-of-income approach has allowed the Times to explore new possibilities without sacrificing its overall performance, giving the company a breadth of opportunities to work with and tons of Foolish optionality.

The digital newspaper and magazine industry is currently valued at $39 billion, for example, with the U.S. having the largest share, valued at just over $16 billion. This industry is expected to reach $44.85 billion globally by 2026, with a compound annual growth rate (CAGR) of 3.55% The Times has a domestic market share of about 4% as of FYE 2021, while still leading the way in print news products. 

But that's just the tip of the iceberg. 

Digital advertising is estimated to reach $786 billion globally by 2026; mobile gaming should grow to a $139 billion industry in the same year, and the digital content creation market as a whole is expected to exceed $38 billion globally by 2030. These markets are fragmented, with a wide variety of players and mediums, as companies continue to shift their focus and rethink how to best take advantage of the technology. This gives the Times room to (re)establish itself as the company to beat. 

2. Resiliency

The company also has staying power. For its 170-plus years, the Times has consistently demonstrated a knack for reinventing itself in a way its rivals can't seem to match. The company went online in 1996, just three years after the internet was "released" to the general public, and in 2015, it launched its own VR app. This forward-thinking mindset helped the company successfully navigate the Great Recession of 2009, as well as what many believed was the beginning of the end of print journalism. 

Financially, the Times is stronger than ever. Revenue for the trailing 12 months (TTM) ending March 31, 2022 sits at $2.1 billion, up 18% year over year. Gross margin (TTM) is around 50%, operating profits are up 11%, and the company has plenty of liquidity: as of March 27th, the Times is sitting on cash and equivalents of just under $475 million, with no debt. 

The company also surpassed its 10 million paid subscriptions goal with the February acquisition of the online sports news outlet, The Athletic, while simultaneously opening the door to a whole new audience. (It's now set a new goal, by the way: 15 million by 2027.) It's also worth noting that the Times pays a modest quarterly dividend of 1.2%, with plans to return a substantial chunk of its free cash flow to investors over the next few years (more on that below).

3. Leadership

CEO Meredith Kopit Levien has done a good job of anticipating obstacles and finding a path around them. Levien joined the Times in 2013 to head its advertising department and quickly began shifting the company's advertising focus toward long-term partnerships. She has been the driving force behind the company's digital-first strategy throughout her tenure, connecting the Times's success with a much bigger picture. 

"We are relentlessly focused on growing the Times, but we're in an ecosystem," Levien said in a 2021 Adweek interview. "A lot of our work is making a market for paid-subscription journalism." 

She was named CEO in late 2020, and continues to demonstrate her ability to adapt on the fly, overseeing the acquisitions of The Athletic and Wordle, while also laying out ambitious goals for the company. 

Things to watch

Like any investment, the Times has its risks. Digital media is a rapidly changing industry after all, and -- combined with the many macroeconomic headwinds still ahead -- there's always the possibility that the company could eventually hit an obstacle it can't overcome. 

In its June Investor Day presentation, Levien outlined key metrics that the company hopes to achieve within the next three to five years:

  • Reach 15 million total subscribers by the end of 2027
  • Grow adjusted operating profit by 9%-12% each year
  • Return 25%-50% of free cash flow to shareholders through dividends and buybacks 

The company currently sits at a P/E ratio around 27, so it's still a little pricey compared to, say, the P/E of 16 you'll pay for News Corporation (NWSA 0.10%), parent company of The Wall Street Journal. But the Times's current P/E is less than its five- and 10-year averages – adjusted for one-time expenses in 2018 – of around 42. For media stock investors, now might offer a great opportunity to add the Times to your buy list.