Rural Stocks Up 13% This Year

The Daily Yonder 40 — 40 stocks chosen to reflect the rural economy — has beaten the Dow and the S&P 500 for the last four years.

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Stocks from companies rooted in rural America are far outpacing the major stock markets — this year, last year and over the last four years.

The Daily Yonder 40 index — 40 publicly traded stocks chosen to represent the rural economy — has risen more than 13% in 2011. The Dow Industrials and the Standard & Poor 500 are have risen 8% and 6.3% respectively in the same period.

The chart above compares these three stock indices since the beginning of 2010. Over that time, the Yonder 40 has soared by 48.5%, double he increases in the Dow and the S&P. (See the next page for the companies that comprise the Yonder 40.)

Only 6 of the Yonder 40 stocks have lost ground this year, as almost every group of businesses in the index advanced. The largest drop in the Yonder 40 in 2011 has been Frontier Communications, which fights in the tough telecommunications arena and is trying to pay off a large acquisition of Verizon’s rural telecom business.

Some major companies have had stagnant stock prices in 2011. Monsanto, the seed and ag chemical maker, is down slightly this year, as is Walmart.

The rest of the index is nearly all positive. Rural retail was up. So were coal stocks and commodities.

Perhaps the most interesting bounce among rural industry is the strong showing of companies related to household furnishings. For example, the largest gainer among the DY40 in 2011 was Bassett Furniture Industries, up nearly 95% this year after being battered down in the recession.

Bassett, based in Bassett, Virginia, has had double digit sales increases in the last two quarters, according to the Martinsville (Va.) Bulletin. This is helping Bassett Furniture stores, many of which were hit hard by the decline in housing sales, which Bassett officials said had a “cataclysmic effect on our industry.” 

Mohawk Industries, the carpet maker, also gained this year after years of losses. In its last quarter, Mohawk nearly doubled its earnings over the year before.

And Plum Creek Timber Company has “reinvented itself,” according to Flathead (MT) Beacon, and is now posting profits after two years of losses. Plum Creek is finding profits even without a revival in the house building industry. 

There were gains across the DY40. Here is news from the rural business scene:

• Coal continued to be a good business — and they have done particularly well since the Japanese nuclear disaster, which has spurred interest in traditional fossil fuels. As the global economic recovery, coal companies have also benefited. Peabody Energy’s first quarter profit rose 32%, and the stock was up over 40% in the last 12 months. Mine Safety Appliances, which makes mining equipment, announced that first quarter sales were up 31%.

And Walter Energy’s first quarter profits were up 97% on higher sales of coking coal.

• The prices for all commodities continued to rise. And that led to a nearly 10% jump in the Greenhaven Commodities Index, which tracks a basket of goods (oil, gas, ores, crops). 

Rising commodity prices also helped shipping companies. RailAmerica’s traffic was up in March as the company shipped more coal and nonmetal minerals. RailAmerica’s stock prices is up 28% this year.

• The farm and ranch economy are doing well, with booming prices for land and grains. That has helped a wide array of Yonder 40 businesses.

Tractor Supply, the largest U.S. chain of farm and ranch stores, had first-quarter earnings that rose 73%. 

A large increase in wheat shipments is helping Deere’s stock price, according to the Wall Street Journal. The farm equipment manufacturer’s stock is up nearly 15% this year as it expects its profits to rise 42%.

• Monsanto hasn’t joined in the rush to higher stock prices, even though its earnings continue to top estimates. Many of the ag chemical companies are down for the year, including Mosaic, Potash Corp. and CF Industries, according to the Wall Street Journal.

• Dean Foods, the country’s largest dairy, continues to have troubles as it is trapped between rising costs and declining prices. Grocers are discounting milk as a way to draw consumers back to their stores. 

• Some companies are taking declining businesses and making them profitable. International Speedway, which operates NASCAR tracks, continues to have declining revenues, as fans are staying away from races. But the company has increased its profitability and its stock prices is up more than 16% this year.

Here are the Yonder 40 stocks and how they have fared so far in 2011.

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