"Newspaper executives watched in horror as one revenue stream after another came under attack. When you add in the impact of the severe economic downturn, the result is an incredibly toxic environment.

"The industry itself was slow to react, waiting until it was almost too late before it began to cut costs. Even then they did not cut deeply enough or fast enough. With all that in mind it's fair to wonder why I would recommend buying newspaper stocks.

"If you believe that newspapers are a dying breed and will never come back, do not read any further. If, however, you believe that some of these companies will find a way to adapt and survive then there are couple of names that offer the potential for good rewards, at least in the medium term.

"While I am not certain that they will prove to be great long-term holds, I think it's likely they could double from present levels over the next 12 to 18 months.

"The two companies I have in mind are the New York Times and Gannett Corporation. Both are trading for about the same price, well down from their highs but well up from their lows.

"Essentially these are newspaper companies that have suffered greatly, as have their shareholders over last three years.

"Gannett is the largest newspaper company in America, publishing 85 daily newspapers including USA Today and over 850 local publications in 31 states. It has also made a significant investment in online properties, reaching over 27 million unique visitors every month.

"The company has been forced to make dramatic cuts in staffing; the good news is that these cuts have resulted in the company achieving profitability in the second quarter of $0.30 per share during one of the most difficult times for national advertising since the Great Depression.

"That compared to a net loss of $10.03 per share in the second quarter of 2008. Gannett declared a small dividend that was well down from a year ago but better than suspending the payment entirely.

"Outside of its core newspaper, The New York Times owns the International Herald Tribune, the Boston Globe and some 50 regional newspapers. Like Gannett, the company has made significant Internet investments.

"It is likely that the Times will divest most of its New England properties including the Boston Globe, a stake in the Boston Red Sox, Fenway Park, and adjacent real estate properties. This could raise a couple of hundred million dollars to help reduce debt.

"Last year, at the depths of the downturn, Mexican billionaire Carlos Slim made a significant investment in the company at ridiculous interest rates of 17%.

"Currently the corporate bonds are yielding over 10%, which is another interesting way to invest in the New York Times. Recently, the company reported a surprise profit based on deep cost-cutting and some tax benefits.

"It's my guess that both the New York Times and Gannet will survive and both will benefit from improving market conditions going forward.

"Staffing costs have been reduced and their costs for paper and ink have dropped significantly as well. Any reasonable rebound in advertising revenue should result in significant improvements to the bottom line.

"If the advertising market continues to drag this could be dead money for the foreseeable future. However, if these companies can show a couple of quarters of improving profitability their stock prices should rise and generate a nice return."

Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.