Korea Trade Deal Lifts Meat Packing Companies

Yonder 40 outpaces all other indexes, led this week by meatpacking stocks. Smithfield and Tyson rise after South Korea drops its beef ban.


It was a good week for the Yonder 40, the stock index of rural America — but the week was best for meat producers Tyson Foods and Smithfield Foods. Tyson rose 13 percent last week and Smithfield jumped nearly 15 percent.

The companies benefited from a trade negotiation breakthrough between the U.S. and South Korea that will reopen the Asian nation to American beef exports. South Korea has banned U.S. beef since a mad cow outbreak in 2003.

The rise in the meat cutters was nearly matched by every other sector in the Yonder 40, stocks picked to reflect the rural economy. Three out of four stocks rose last week — and the Yonder 40 is leading the other major indexes since July 1, 2007.

Last week, the Yonder 40, the Dow Industrials and the S&P all rose by about four and a half percent. Since July, however, the Yonder 40 is off by two percent while the S&P 500 is down by 7.5 percent.

The laggards in the 40 were Lee Enterprises, the newspaper owner that lost five percent last week, also, Sturm Ruger; the gun maker continued its downward slide and is now worth about a third of its value from last summer.

President Bush has been pushing for a new comprehensive trade agreement with South Korea, but negotiations have hung up on the 2003 beef ban. Sen. Max Baucus, a Democrat from Montana, said he would oppose any new South Korean trade deal until the beef restrictions were lifted.

Now that the beef question has been settled, the larger trade deal will become part of the stark disagreement over trade between Republicans and Democrats.

Here is recent news about the companies that help drive the rural economy:

“¢ Barrons issued a favorable report on Gaylord Entertainment, owner of the Grand Ole Opry. Gaylord is down 31 percent since early December and this decline has made the company an attractive buy, says Barrons.

“¢ Mohawk, the Georgia carpet maker, reported that its first quarter net income dropped 28% from last year. The company reported weakness in the sales of carpet in the U.S. residential market.

“¢ Monsanto announced that it would buy $800 million more of its own stock over the next three years.

“¢ The Wall Street Journal reported that the rise in prices for agricultural products was spurring a number of initial public offerings in the sector. There have been 35 IPOs in the ag sector in the last four years.

“¢ Southwest Bancorp, based in Oklahoma announced that its net income rose 16 percent over the previous year. Geography does make a difference this year in banking, as Regions Financial Corp., with a large presence in the dicey Florida housing market, posted only a 1.1 percent rise in first quarter net income. Regions quadrupled its loan-loss provision as the bank's percentage of bad loans more than doubled.

“¢ UST, the smokeless tobacco producer, announced that it would support a bill that would give the Food and Drug Administration the power to regulate tobacco products. All three remaining presidential candidates are co-sponsors of the Senate version of this bill.

“¢ The rural retail sector remained weak. Family Dollar reported that same store sales fell 4.4 percent in March. Cato Corp. announced that its same store sales in March dropped 9 percent. Stage Stores had a 10.3 percent decline in March.

Here are the results for the full Yonder 40 for the week April 11 to April 18, 2008:

Yonder 40 Ticker Price April 19 Price Change 4/12 to 4/19 Percent Change 4/12 to 4/19
Alico Inc. ALCO $41.76 $0.70 1.7%
Andersons Inc. ANDE $43.62 $1.60 3.8%
Burlington Northern Santa Fe Corp. BNI $99.77 $6.58 7.1%
Berkshire Hathaway BRKB $4,288.00 -$66.00 -1.5%
Bassett Furniture BSET $11.90 $0.06 0.5%
Peabody Energy Corp. BTU $66.67 $5.60 9.2%
Cabela's Inc. CAB $13.88 -$0.12 -0.9%
ConAgra Foods Inc. CAG $24.05 -$0.19 -0.8%
Cato Corp. Cl A CTR $15.63 $1.29 9.0%
Citizens Communications CZN $10.40 $0.20 2.0%
Deere & Co. DE $92.68 $6.37 7.4%
Dean Foods Co. DF $22.19 $1.94 9.6%
DIRECTV Group DTV $25.79 $0.05 0.2%
Family Dollar Stores Inc. FDO $20.51 $1.33 6.9%
Fleetwood Enterprises Inc. FLE $4.08 $0.19 4.9%
FairPoint Communications FRP $8.34 $0.53 6.8%
Gaylord Entertainment Co. GET $31.49 $2.39 8.2%
Hormel Foods HRL $39.76 -$1.21 -3.0%
International Speedway Corp. ISCA $43.07 $1.03 2.5%
Lee Enterprises LEE $9.14 -$0.47 -4.9%
Mohawk Industries Inc. MHK $78.18 $4.69 6.4%
Monsanto Co. MON $129.19 $8.07 6.7%
Mine Safety Appliances Co. MSA $39.79 -$0.16 -0.4%
Southwest Bancorp OKSB $16.94 $0.14 0.8%
Plum Creek Timber REIT PCL $42.01 $2.08 5.2%
Penn Virginia Corp. PVA $51.88 $4.57 9.7%
Ralcorp Holdings RAH $58.53 $2.63 4.7%
Regions Financial Corp. RF $21.60 $1.83 9.3%
Sturm Ruger & Co. RGR $7.43 -$0.28 -3.6%
Smithfield Foods SFD $28.54 $3.63 14.6%
Skywest Inc. SKYW $19.36 $0.32 1.7%
Southern Co. SO $36.95 $0.65 1.8%
Stage Stores Inc. SSI $14.23 $0.62 4.6%
Tractor Supply Co. TSCO $36.98 -$0.14 -0.4%
Tyson Foods TSN $19.02 $2.17 12.9%
UST Inc. UST $52.27 -$1.18 -2.2%
Waddell & Reed Financial Inc. WDR $33.32 $1.36 4.3%
Walter Industries WLT $69.67 $4.41 6.8%
Wal-Mart Stores WMT $56.31 $1.51 2.8%
Cimarex Energy XEC $63.18 $5.04 8.7%