Rural Stocks Rise And Fall With Conflicting Economic Trends

Commodity prices go down, which means that coal stocks plunge and meat packers go up. Retail outlets stage a two month rally, but consumer spending dropped in August. The rural economy is one mixed up place.


The rural economy has been whipsawed by a slew of conflicting signals, prices and trends. Some places and companies benefit and others don't. And so at the end of last week's trading, the Yonder 40 — DY's index of publicly-traded companies meant to mirror the rural economy — had remained largely unchanged.

The Yonder 40 is still far ahead of the Dow Industrials and the S&P 500 over the last 20 months. And since the beginning of 2008, the Yonder 40 index is down less than a point. The Dow, NASDAQ and S&P 500 are off by 14% since January 1.

(In the massive sell-off Monday, the DY 40 matched market averages. The Yonder 40 dropped 4.4%. The Dow Industrials were down by 4.4%; the S&P 500 fell by 4.7% in Monday's turbulent trading.)

Last week's trading showed how the rural-based stock index has bettered its big-city competitors over the last year. The DY 40 balanced the good with the bad. While some groups of stocks dropped precipitously, others showed solid gains.

For instance, as oil prices collapsed, so did the stock price for Penn Virginia Corp., which saw its stock fall more than 12 percent last week. Shares of coal producers fell, too, as the markets grew jittery over a stronger U.S. dollar (which could diminish exports) and a slowing world economy (which could reduce demand for the fuel). Walter Industries was down more than 5 percent this week; Cimarex was off 2 percent.

But, the commodities game was not one-sided last week. The U.S. Department of Agriculture cut its projections for corn and soy bean crops this past week. The weather in August wasn't favorable for the crops — corn and soy beans were already lagging because of the spring and early summer floods — and so the USDA reduced its projections. (Before anyone panics, even at these reduced yields, the 2008 corn crop would still be the second largest on record; soybean production would be the fourth-largest.) Still, the announcement boosted corn and soybean prices stocks and some ag companies followed. Monsanto was up more than 4 percent for the week. Fertilizer producers saw their stocks rise across the board.

Back and forth, back and forth.

Banking stocks have been hit hard recently, but two Yonder bankers did well last week. Regions Financial was up over 5 percent. Southwest Bancorp rose more than 18 percent as the bank continued to pump out steady dividends.

Retail outlets have staged a remarkable run recently. Wal-Mart stock has been rising steadily for the past year. Stage Stores is up from a July low. The national retail index has risen 15 percent in the last two and a half months.

But what next? The Wall Street Journal predicts there is likely to be a "sharp cooldown coming in the fall" for consumer spending. Retail sales in August fell slightly in August, according to the Financial Times, even as economists projected a slight rise. "The sharp fall in sales signals that consumer spending has failed to hold up since the government completed its $100 billion stimulus of cheques to consumers in the summer, while consumers are wary of spending extra disposable cash freed up by falling energy prices over fears about the wider economic outlook," the FT reports.

The weak dollar has been a boon for some smaller communities, reports the Wall Street Journal. As the dollar fell, exports rose, as foreign buyers found U.S.-made goods to be a bargain. This benefited communities that are home to export-oriented manufacturers.

Waterloo, Iowa, for example, has a huge Deer & Co tractor-making plant, which recently announced its second major investment of the year. (Deere is a member of the Yonder 40.) Deere is spending $187 million to increase its output of large tractors from Waterloo. One out of three of these machines is destined for sale outside the U.S. Deere employs five percent of Waterloo's work force.

In other news from the Yonder 40:

“¢ Three Davies County, Missouri, residents have sued Smithfield Foods over odors from the company's hog farms.

“¢ Although asset-management first have been battered recently as the stock market has struggled, rural-based Waddell & Reed Financial has received good ratings recently. Waddell & Reed still dropped 5 percent this past week.

Here is how the entire Yonder 40 entered this coming week:


Yonder 40 Ticker Price September 15 Price Change 9/5 to 9/15 Percent Change 9/5 to 9/15
Alico Inc. ALCO 39.76 $1.81 4.8%
Andersons Inc. ANDE 42 -$2.96 -6.6%
Burlington Northern Santa Fe Corp. BNI 101.84 $1.97 2.0%
Berkshire Hathaway BRKB 3,980.00 $68.00 1.7%
Bassett Furniture BSET 10.15 -$0.11 -1.1%
Peabody Energy Corp. BTU 53.99 $0.69 1.3%
Cabela's Inc. CAB 12.28 $0.12 1.0%
ConAgra Foods Inc. CAG 20.04 $0.38 1.9%
Cato Corp. Cl A CTR 17.97 $0.00 0.0%
Citizens Communications CZN 11.68 $0.00 0.0%
Deere & Co. DE 63.24 $0.01 0.0%
Dean Foods Co. DF 23.92 -$1.03 -4.1%
DIRECTV Group DTV 27.59 $1.02 3.8%
Family Dollar Stores Inc. FDO 27.27 $0.10 0.4%
Fleetwood Enterprises Inc. FLE 1.71 $0.01 0.6%
FairPoint Communications FRP 8.73 $0.28 3.3%
Gaylord Entertainment Co. GET 32.01 -$1.19 -3.6%
Hormel Foods HRL 37.26 $1.30 3.6%
International Speedway Corp. ISCA 41.06 $0.06 0.1%
Lee Enterprises LEE 2.68 -$0.46 -14.6%
Mohawk Industries Inc. MHK 69.9 -$0.56 -0.8%
Monsanto Co. MON 111.76 $4.57 4.3%
Mine Safety Appliances Co. MSA 36.19 $1.02 2.9%
Southwest Bancorp OKSB 19.52 $3.06 18.6%
Plum Creek Timber REIT PCL 49.68 $1.16 2.4%
Penn Virginia Corp. PVA 55.53 -$7.71 -12.2%
Ralcorp Holdings RAH 65.25 $2.96 4.8%
Regions Financial Corp. RF 11.69 $0.60 5.4%
Sturm Ruger & Co. RGR 7 -$0.42 -5.7%
Smithfield Foods SFD 22.1 $1.34 6.5%
Skywest Inc. SKYW 19.02 $1.15 6.4%
Southern Co. SO 38.14 $1.04 2.8%
Stage Stores Inc. SSI 14.96 -$0.34 -2.2%
Tractor Supply Co. TSCO 43.64 $0.04 0.1%
Tyson Foods TSN 13.49 -$0.74 -5.2%
UST Inc. UST 67.94 $0.39 0.6%
Waddell & Reed Financial Inc. WDR 26.93 -$1.42 -5.0%
Walter Industries WLT 72.45 -$4.03 -5.3%
Wal-Mart Stores WMT 62.41 $1.67 2.7%
Cimarex Energy XEC 49.64 -$0.96 -1.9%