Grand Ole Opry, Food Stocks and Family Dollar Lead Strong Yonder 40
Rural stocks still lead the Dow and S&P as Texas billionaire buys the company that owns the Grand Ole Opry and food companies rebound.
The stock price of rural-based firms continued to outpace the other major stock indices. The Yonder 40, 40 stocks chosen to reflect the rural economy, is down 7.4% since July of 2007, only half the decline of the Dow Industrials.
All the stock indices rose last week, as the markets bounced back from heavy losses in June and early July. In the Yonder 40, stocks that had been performing poorly — retail stores and regional banks — have risen in recent weeks. Meanwhile, energy stocks — especially coal miners — that had led the way over the last year lost some of their gains.
The Yonder 40 was led this week by the owner of hotels and Nashville's Grand Ole Opry, Gaylord Entertainment. The Nashville-based firm saw its stock price jump more than 30 percent this week after a very rich Texan, Robert Rowling, bought a 14 percent stake in the company.
Rowling ranks 49th on the Forbes list of richest Americans (with $6.4 billion, he ranks fifth in Texas) and has other hotel investments. Some analysts predict Rowling may buy controlling interest in Gaylord, which would transfer ownership of the Opry and the Ryman Auditorium, the soul of country music, to the Texan.
Even after this week's extraordinary jump in price, however, Gaylord's stock is still trading at only half of its value from a year ago.
There was other news this week about companies that depend on rural America for their well-being.
“¢ Energy stocks lost value. Peabody Coal was down almost 17%. Cimarex Energy was off 6%. Penn Virginia was down over 14%. All of these firms had large gains over the last year. There was also some fear that Australia was gearing up to expand coal exports.
“¢ Rural retailers saw increases in their business and their stock price after losses earlier this year. Stage Stores, a discount retailer, reported higher earnings. And as families look to save money, bargain retailer Family Dollar reported a 7.1% rise in fiscal third-quarter net income. Analysts said Family Dollar was benefiting from spending spurred by government rebate checks.
“¢ Fertilizer and seed stocks couldn't go up for ever, and in July they began to sink. The Wall Street Journal reported that seed makers like Monsanto (a Yonder 40 member) and fertilizer makers saw their large gains in the second quarter of '08 wiped out in a matter of days. Monsanto was down 6% this week.
“¢ Continued weakness in the housing markets have dragged down the stock price of Mohawk Industries (the carpet maker) and Bassett Furniture.
“¢ Food and meat producer stocks had been dropping, but in the last week they came back. Tyson Foods (chicken) was up over 11%. Dean Foods (milk) was up 10.5%. Smithfield Foods (meat) rose 15.4% in the last week. Food stocks were back in fashion — especially those with strong brand names — as Americans might be shunning restaurants and cooking more at home.
This is how the entire Yonder 40 fared the week ending July 18, 2008:
|Yonder 40||Ticker||Price July 18||Price Change 7/11 to 7/18||Percent Change 7/11 to 7/18|
|Burlington Northern Santa Fe Corp.||BNI||$94.57||-$0.88||-0.9%|
|Peabody Energy Corp.||BTU||$64.10||-$12.75||-16.6%|
|ConAgra Foods Inc.||CAG||$20.76||-$0.20||-1.0%|
|Cato Corp. Cl A||CTR||$18.45||$1.21||7.0%|
|Deere & Co.||DE||$67.33||$2.34||3.6%|
|Dean Foods Co.||DF||$19.88||$1.89||10.5%|
|Family Dollar Stores Inc.||FDO||$23.81||$1.24||5.5%|
|Fleetwood Enterprises Inc.||FLE||$2.36||$0.08||3.5%|
|Gaylord Entertainment Co.||GET||$28.26||$6.67||30.9%|
|International Speedway Corp.||ISCA||$36.95||$0.49||1.3%|
|Mohawk Industries Inc.||MHK||$64.85||$5.78||9.8%|
|Mine Safety Appliances Co.||MSA||$37.80||$0.89||2.4%|
|Plum Creek Timber REIT||PCL||$46.07||$3.95||9.4%|
|Penn Virginia Corp.||PVA||$64.51||-$10.62||-14.1%|
|Regions Financial Corp.||RF||$10.11||$1.57||18.4%|
|Sturm Ruger & Co.||RGR||$7.02||$0.68||10.7%|
|Stage Stores Inc.||SSI||$14.10||$1.21||9.4%|
|Tractor Supply Co.||TSCO||$30.35||$1.77||6.2%|
|Waddell & Reed Financial Inc.||WDR||$32.53||$1.41||4.5%|