Most Fools have launched headlong into preparing for the end of this year, while attempting to determine which sectors may offer upside surprises in 2011. It's the latter task that continues to be akin to pulling one's own teeth.
Clearly, the sectors that will perform best in 2011 -- or any other year, for that matter -- are those that can provide the most meaningful upside surprises for investors and the world at large. On that basis alone, I'm not yet ready to dismiss the forlorn media companies as places where real profits might be around the corner. Media are undergoing substantial change, much of which is overdue. And for that reason alone, anyone placing even a toe in their water clearly should do so after careful study, sifting, and research.
The possibilities in the group are both substantial and varied. We can likely all agree without much deliberation that the newspaper publishers don't belong in our otherwise pristine portfolios, nor do the magazine types. Indeed, with virtually all the publishers you'll now encounter more analysts in their traditional hiding place -- the "hold" rating -- than the number of troops you might have found dug into foxholes during the Big War.
It's better on this side
Which leads us to the electronic and new media side of the industry. A truly noteworthy company during 2010 has been Netflix
Netflix's shares have tripled in value this year, while the company has come to be perceived as one of the culprits in cable and satellite customers' "cord cutting." However, I still find myself concurring with CBS
I also find it hard to quarrel with my fellow Fool Travis Hoium, who sees the continued rollout of Comcast's
Time to be demanding of cable
As some Fools know, I've been yammering for years about the cable companies' lethargic pace in implementing user-friendly video on demand. It seems to me that if streaming video really is a growing threat to traditional pay TV, TiVo
But beyond that, there appears to be a plethora of positive changes on the horizon for the cable providers. I've alluded to the pending Comcast takeover of General Electric's
Channels by choice
Furthermore, the biggest change of all may be spearheaded by Time Warner Cable
Comcast has been skirmishing with Level 3
Interestingly, Comcast has received backing on the subject from Time Warner Cable CEO Glenn Britt, whose take on the dust-up is that, "If the traffic is way out of balance, somebody pays someone else." And if that weren't enough, Comcast has stated that it won't raise its charges for heavy Web users.
So with all that's going on, 2011 could be just the time to catch a ride on cable. For years, the group has been long on potential, but too often short -- or at least slow -- on delivery. But should the Comcast/NBC U combination come off successfully, demand video become more compelling, and strides be made toward personalized channel offerings, 2011 could see cable hit a new gear. I'd especially urge my Foolish friends to keep a closer eye on events at Comcast than you might have in the past.
Netflix is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named above. The Motley Fool has a disclosure policy.