Thursday, April 24, 2014

The Yonder 40 — DY's Stock Index of Rural America

06/30/2007

Justin BootsAt the end of every day we hear reports that measure the worth of industrial America. The Dow Industrials are up or down. The Standard and Poor 500 advances or retreats. Stocks gain or lose, and America counts its money.

Justin Boots — by Berkshire Hathaway

Photo by Munchkee

Mostly, however, the Dow and the S&P and the NASDAQ are made up of companies based in urban America. The standard stock exchanges may or may not measure the economic vitality of rural America, too. But we here at the Daily Yonder wondered if there might be another sort of stock index that could better reflect the economies outside cities.

We decided to build our own. The editors are pleased to announce today the Yonder 40 — a rural American stock index. Here are two score companies whose fortunes measure, to some degree, the state of rural America's economy.

We didn't pick the Yonder 40 out of a hat. DY relied on James Branscome, a native of Hillsville, Virginia, and a former managing director of Standard and Poor. Brother Branscome (now living in Montrose, Colorado) helped choose the stocks for the S&P 500, so finding 40 for the Yonder was no big deal. He received able help from John Borden, a native of Danville, Virginia, and a former director of investor relations for JPMorgan Chase. They both made clear that the Yonder 40 in no way represents investment advice. It is an index of stocks chosen to be representative of the U.S. rural economy and the stocks that do a substantial portion of their business there.

Everyone will find some reason to quarrel with our picks. Berkshire Hathaway? Isn't that really Warren Buffett's insurance company? Well, yes, Berkshire is mostly insurance — but it's also Dairy Queen, Justin Boots and Fruit of the Loom. It's also run out of Omaha, Nebraska — not officially rural, but more Yonder than your run of the mill hedge fund run by some 30-somethings in $500 shoes.

None of the Yonder 40 businesses is strictly rural. Every company on this list depends on urban America. Cities are covered up these days with Wal-Marts, after all. But each of the firms in the Yonder 40 has strong roots in rural America. They are small town banks, hog raisers, Spam-makers, the Grand Ole Opry, NASCAR tracks, coal miners, farmers, hunters, citrus growers and even our brothers and sisters in the rural press.

The Grand Ole Opry (owned by Gaylord Entertainment). Is that Roy Clark on the big screen?

Photo by Josh Bousel

grand ole opryWe've "invested" $1,000 in each of the 40 Yonder stocks. Each week we'll compare the Yonder 40 against four other indexes:

"¢ The Dow Industrials (30 of the nation's largest companies)
"¢ The S&P 500 (a broader market index; unlike the Yonder 40, investments in the S&P 500 are weighted to reflect the size of the company)
"¢ The NASDAQ index (smaller stocks)
"¢ The Rydex S&P Equal Weighted ETF (this stock invests an equal amount of money in each S&P 500 stock, just as the Yonder 40 invests an equal amount in every stock. Its ticker is RSP.)

How will the Yonder compare to the more urban indexes? We don't have the slightest idea. But we'll report each week on how the Yonder 40 is doing.

And so, with no further delay, we present the Yonder 40!

COMPANY TICKER WHAT THEY DO
Alico Inc. ALCO Oranges, grapefruits, sugarcane and 136,000 acres in Florida
Andersons Inc. ANDE From turf to ethanol to fertilizer
Bassett Furniture Industries Inc. BSET Furniture maker in Bassett, Virginia
Berkshire Hathaway Inc. Cl B BRKB Dairy Queen, Justin Boots, Fruit of the Loom and Clayton Homes
Burlington Northern Santa Fe Corp. BNI Hauls coal from the Powder River and grain from the Plains
Cabela's Inc. CAB Hunt and fish, here
Cato Corp. Cl A CTR Selling women's fashion in rural America
Cimarex Energy Co. XEC Domestic oil and gas producer
Citizens Communications Co. CZN Provides internet & phone in 23 states
ConAgra Foods Inc. CAG Butterball, Eckrich, Armour, Ready Crisp; largest buyer is Wal-Mart
Dean Foods Co. DF Silk soymilk, dairy creamers and Land o' Lakes
Deere & Co. DE John Deere green
DIRECTV Group Inc. DTV "I don't think she's seen the sky since we got the satellite dish" James McMurtry
FairPoint Communications Inc. FRP Phone and internet services in 18 states
Family Dollar Stores Inc. FDO Every town had a dollar store
Fleetwood Enterprises Inc. FLE Mobile homes
Gaylord Entertainment Co. GET Owner of the Grand Ole Opry
Hormel Foods Corp. HRL Your source for canned pork products — i.e., spam
International Speedway Corp. ISCA 11 race tracks, including NASCAR's Daytona and Talladega
Lee Enterprises Inc. LEE 58 daily newspapers and more than 300 weeklies all over rural America
Mine Safety Appliances Co. MSA Produces equipment used in mining
Mohawk Industries Inc. MHK Carpet maker centered in Dalton, GA
Monsanto Co. MON We're talkin' ag
Peabody Energy Corp. BTU "Mr. Peabody's coal train has hauled it away" John Prine
Penn Virginia Corp. PVA Owner of oil, gas & coal in the east
Plum Creek Timber Co. Inc. PCL 8.2 million acres of timber in 18 states
Ralcorp Holdings Inc. RAH Ralston Purina spin-off; food proccessor and Beech-Nut baby food maker
Regions Financial Corp. RF Community banking in the south and midwest
Skywest Inc. SKYW The airline for those not close to a hub
Smithfield Foods Inc. SFD Leading hog raiser and meat producer
Southern Co. SO Biggest power producer in the south
Southwest Bancorp Inc. OKSB Bank holding company on the Plains
Stage Stores Inc. SSI Bealls
Sturm Ruger & Co. RGR Our Second Amendment representative
Tractor Supply Co. TSCO You know the place
Tyson Foods Inc. Cl A TSN From chick to chicken salad
UST Inc. UST Making the stuff that puts the circle in the back pocket of a cowboy's Wranglers
Waddell & Reed Financial Inc. WDR Financial advisors to small town America
Wal-Mart Stores Inc. WMT Any questions?
Walter Industries Inc. WLT Southern coal producer and mobile homes