Subway Filling Wal-Marts Ã¢â‚¬” News of the Yonder 40
Meat producers fight with corn producers. Investors still like coal stocks. McDonald’s is overtaken by Subway inside Wal-Mart Stores.
All the major stock indexes rose this past week, including the Yonder 40, DY’s group of 40 publicly-traded companies that reflect the economy of rural America.
The Yonder 40, the NASDAQ and a fund that holds equally weighted investments in the S&P 500 were all up by 1.4 percent in the last week. The S&P 500 rose 2.1 percent and the Dow Industrials gained 2.5 percent.
(The Yonder tracks both the S&P 500 and an exchange traded fund (ticker: RSP). The S&P 500 is weighted to reflect the size of the companies; RSP makes equal investments in all 500 S&P stocks.)
The results of the last week show that large companies tended to do better than small firms.
Since July 1, the Yonder 4 is down by nearly four percent.
The stalwart in the Yonder 40 this week was Stage Stores (SSI), the owner of the Beall’s chain of department stores. Stage was up 13 percent, regaining loses that had mounted in recent weeks. Stage was recommended as a “buy" by one analyst.
Peabody Coal (BTU) continued to rise on a belief in the markets that coal is valuable and coal companies could be targets for takeover.
The tug of ethanol production is creating a split in the food industry — and lower stock prices for Tyson Foods (TSN). The Wall Street Journal explained this week:
“Corn farmers are pushing for more ethanol production as the industry creates an enormous new market for their crop, giving corn prices the kind of lift they haven't seen in years. But the corn farmer's win is the hog farmer's loss. Meat, dairy, and other food producers are pushing back against the ethanol boom as higher grain prices cut into their already slim profit margins."
Tyson is reporting lower earnings, in part because of higher grain prices. The cost of feeding corn to Tyson’s chickens was up $113 million in the third quarter over the same time in 2006. Meat and dairy producers are now battling corn producers with research reports and lobbyists.
Analysts wonder how higher commodity prices will affect other food producers. In particular, they’ll be looking at earnings to be reported next week by ConAgra and General Mills. ConAgra (CAG) is a member of the Yonder 40 and was up 3 percent this past week.
The Iowa Attorney General is investigating Monsanto’s (MON) seed, trait and chemistry licensing and marketing programs, according to the Iowa Independent.
Newspaper stocks continued to slide. Lee Enterprises (LEE) was down five percent this past week. Bank of America started coverage of the rural newspaper owner, rating it neutral.
The most interesting news of the week, however, came from Wal-Mart. The big blue landmark on the edge of America’s small towns now sports more Subway sandwich shops inside its stores than McDonald’s hamburger stands.
For years, McDonald’s had an exclusive place inside Wal-Mart. No more. The Wall Street Journal reports that there are now 1,419 Subways inside Wal-Mart stores, but only 1,021 McDonald’s. Subway opened 105 shops inside Wal-Mart this past year, more than three times the number of McDonald’s.
The Journal suspects the move toward sandwiches rather than fries might reflect the new soft side of Wal-Mart’s public image. The Arkansas-based retailer, criticized for stingy benefits, has lately shown a concern for its employees’ health — or, at least, their diets. A Wal-Mart vice president for corporate strategy and sustainability earlier this year suggested "eating healthy meals instead of fast food" might be a way for Wal-Mart workers to improve their health.
Wal-Mart’s stock was healthier this week, up 2 percent off an eight-year low last week.
Below is the full Yonder 40 and the results of each stock in the week September 7-14, 2007.
|Companies||Ticker||Price September 14||Price Change for Week||Percent Change for Week|
|Burlington Northern Santa Fe Corp.||BNI||$82.05||$1.08||1.3%|
|Peabody Energy Corp.||BTU||$47.42||$2.31||5.1%|
|ConAgra Foods Inc.||CAG||$26.36||$0.84||3.3%|
|Cato Corp. Cl A||CTR||$20.96||$0.06||0.3%|
|Deere & Co.||DE||$137.93||$2.07||1.5%|
|Dean Foods Co.||DF||$25.51||-$1.29||-4.8%|
|Family Dollar Stores Inc.||FDO||$28.59||$0.59||2.1%|
|Fleetwood Enterprises Inc.||FLE||$8.56||-$0.35||-3.9%|
|Gaylord Entertainment Co.||GET||$50.95||$1.01||2.0%|
|International Speedway Corp.||ISCA||$47.13||-$0.23||-0.5%|
|Mohawk Industries Inc.||MHK||$83.56||-$2.16||-2.5%|
|Mine Safety Appliances Co.||MSA||$47.14||$0.87||1.9%|
|Plum Creek Timber REIT||PCL||$42.62||$2.09||5.2%|
|Penn Virginia Corp.||PVA||$40.31||$1.39||3.6%|
|Regions Financial Corp.||RF||$30.76||$0.34||1.1%|
|Sturm Ruger & Co.||RGR||$17.31||$0.64||3.8%|
|Stage Stores Inc.||SSI||$18.79||$2.24||13.5%|
|Tractor Supply Co.||TSCO||$47.55||$1.49||3.2%|
|Waddell & Reed Financial Inc.||WDR||$24.56||$0.76||3.2%|