Agriculture and Energy Thrive; Rural Consumers Lag

deereThe stocks in the Yonder 40 were picked to reflect the rural economy. What they show is a rural economy split between big winners and big losers.


john deereThe stock price for Deere was up 56 percent in the last six months.
Photo: Geri Suderman

In the last six months of 2007, companies that produced energy or supplies for agriculture gained. Those that catered to rural consumers lost.

The Yonder 40, a collection of 40 publicly traded stocks aimed at reflecting the rural economy, showed two different rural Americas. The one bolstered by higher energy prices (coal, ethanol, oil and electricity) did quite well. But the other rural America — the one populated by consumers — did quite poorly.

While the Yonder 40, the collection of 40 companies reflecting the rural economy, was down five percent in value since it began July 1, few stocks were close to that happy medium. The closest was Smithfield Foods, the hog producer, which was down about 6 percent for the six months.

The entire Yonder 40 fared a bit worse than the other indexes used to measure stock activity. The Dow Industrials, for example, was off 1 percent for the six months ending 2007. The NASDAQ was up about 2 percent. And the S&P 500, the broadest of the stock indexes, was down about 1.7 percent.

Most companies in rural America did considerably better — or considerably worse — than the average. And the patterns of gains and losses indicate that parts of the rural economy are booming while others are sucking wind.

The farm economy is bolstered by record prices for commodities and that is reflected in the stock prices of companies that serve agriculture. Deere is up 67 percent in six months. Monsanto, the seed and ag chemical company, has risen 56 percent since July 1. Ralcorp is up 14 percent.

The price of energy is up — and so are the stock prices of those rural firms producing fuel and electricity. Peabody Energy, the coal miner, has risen 28 percent is six months. Walter Industries, another coal producer, rose 24 percent. Mine Safety Appliances (a maker of mining equipment) was up 21 percent. Southern Company, the huge power producer, was up 18 percent in six months; Penn Virginia was up 9 percent; Cimarex Energy gained 8 percent.

There were other notable gainers among the Yonder 40. Warren Buffett regained some of his magic and Berkshire Hathaway gained 31 percent in six months. The small town financial services firm Waddell & Reed rose 39 percent.

The losing end of the Yonder 40 was populated by companies supplying goods to rural consumers. Sturm Ruger, the gunmaker, was down 47% for the six months. Family Dollar Stores, the five and dime outlet for low-income shoppers, was off by 43 percent. Fleetwood Enterprises, which produces manufactured housing, was down 34 percent. Cabela's, the outdoor sporting goods store, was down by 32 percent and Tractor Supply, the stores that sell "the stuff you need out here," was down 31 percent.

Rural retail stores were slaughtered over the last six months, as sales to rural consumers stagnated. Cato Corp and Stage Stores were both down sharply. So was Gaylord Entertainment (Opryland) and International Speedway. Bassett Furniture and Mohawk Industries (carpets) — firms that supply goods to the housing market — were both down by 25 percent. Wal-Mart was down by a bit more than a percent, which given the larger market, might be considered a success.

And on the other end of the agriculture market, Tyson Foods was off by more than 33 percent as feed costs rose and chicken prices dropped.

The full Yonder 40 results for the period from July 1 to December 31, 2007 is below. The stocks are sorted by their returns for six months.

Rank Companies Ticker Price Dec. 31, 2007 Percent Change July 1 to Dec. 31, 2007
1 Monsanto Co. MON $111.69 66.6%
2 Deere & Co. DE $93.12 56.4%
3 Waddell & Reed Financial Inc. WDR $36.09 38.8%
4 Berkshire Hathaway BRKB $4,736.00 31.4%
5 Peabody Energy Corp. BTU $61.64 27.5%
6 Walter Industries WLT $35.93 24.1%
7 Mine Safety Appliances Co. MSA $51.87 20.7%
8 Southern Co. SO $38.75 18.0%
9 Plum Creek Timber REIT PCL $46.04 14.8%
10 Ralcorp Holdings RAH $60.79 13.7%
11 Skywest Inc. SKYW $26.85 13.2%
12 Hormel Foods HRL $40.48 10.2%
13 Penn Virginia Corp. PVA $43.63 9.1%
14 Cimarex Energy XEC $42.53 7.9%
15 UST Inc. UST $54.80 6.8%
16 DIRECTV Group DTV $23.12 0.0%
17 Andersons Inc. ANDE $44.80 -0.6%
18 Burlington Northern Santa Fe Corp. BNI $83.23 -0.9%
19 Wal-Mart Stores WMT $47.53 -1.2%
20 Smithfield Foods SFD $28.92 -6.1%
21 ConAgra Foods Inc. CAG $23.79 -10.2%
22 Citizens Communications CZN $12.73 -10.3%
23 Dean Foods Co. DF $25.86 -18.9%
24 FairPoint Communications FRP $13.02 -21.7%
25 International Speedway Corp. ISCA $41.18 -21.9%
26 Southwest Bancorp OKSB $18.33 -22.5%
27 Gaylord Entertainment Co. GET $40.47 -24.6%
28 Regions Financial Corp. RF $23.65 -25.3%
29 Bassett Furniture BSET $9.34 -25.9%
30 Mohawk Industries Inc. MHK $74.40 -26.2%
31 Lee Enterprises LEE $14.65 -27.1%
32 Cato Corp. Cl A CTR $15.66 -27.5%
33 Stage Stores Inc. SSI $14.80 -28.9%
34 Tractor Supply Co. TSCO $35.94 -31.0%
35 Cabela's Inc. CAB $15.07 -31.9%
36 Tyson Foods TSN $15.33 -33.5%
37 Fleetwood Enterprises Inc. FLE $5.98 -33.9%
38 Alico Inc. ALCO $36.50 -40.2%
39 Family Dollar Stores Inc. FDO $19.23 -43.1%
40 Sturm Ruger & Co. RGR $8.28 -46.6%