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2011 ended up being a whole bunch of nothing for the Yonder 40, the stock index of rural America.
The 40 publicly traded companies that reflect the rural economy went up 15 percent by the spring, then down nearly as much by summer. Then up. Then down. Then back to where it all began exactly one year ago. (See the chart above for the gyrations of the DY 40, the Dow and the S&P.)
The DY 40 index ended one-third of a percent lower than it was 365 days ago. The Dow Industrials were up for the year, by 5.5 percent. The larger Standard & Poor 500 was even for the year. And the NASDAQ dropped 1.8 percent.
Just over half (21) of the 40 rural stocks rose in 2011.
Like we said, the rural stocks in the DY 40 had an average year.
Overall, the rural economy did better than the cities in 2011. Unemployment in rural counties was lower in rural counties through most of the year than it was in urban counties. Prices for agricultural goods stayed high, and that supported stupendous land sales in the Corn Belt. There was a lot of energy development, particularly gas drilling in shale deposits across the country. In some of these areas, not only is unemployment almost non-existant, but there is a shortage of housing.
The fate of rural stocks, however, doesn’t track employment figures. The companies that had the worst year on Wall Street were those in the energy field.
After a skyrocketing 2010, coal stocks are low, as Wall Street worried that a global recession and slowing growth in China will reduce demand. Peabody Energy, Walter Energy and Cimarex Energy were all down by more than 30 percent for the year.
The biggest loser (minus 68.5 percent) among rural stocks was Penn Virginia, an oil and gas producer that has been active in developing shale gas properties.
Banking stocks also lost, as did Waddell & Reed, the financial planning and stock broker for small town America.
GreenHaven, an index of commodities, was down 9.2 percent for the year. Here is how the 40 stocks in the DY 40 fared in 2011:
The big winner was Sturm Ruger, the gunmaker, which more than doubled in price over the last year. There is still a fear that the Obama administration will impose new gun restrictions, even though there has been no move in Congress to tighten gun laws. More important, perhaps, people feel a need to take responsibility for their own protection. More women are buying guns and attending firearms classes. More people are getting permits.
Many of the other gainers in 2011 were stocks that had been beaten down in previous years. Bassett Furniture continued to gain, up 78 percent in 2011, following a 20 percent gain in 2010. Bassett had nearly been destroyed by the housing slump that began in 2008.
Dean Foods had dropped by more than 51 percent in 2010. It rose 26.7 percent this year.
Discount stores continued to thrive. Tractor Supply, Family Dollar and Walmart all had double digit gains in 2011.
But, lets face it, compared to 2010, rural stocks had a bad year. In 2010, the DY 40 rose more than 30 percent, blasting ahead of the S&P, which rose 12.8%.
So maybe it was time for an average year.
But where will the growth come in 2012? Will coal make a comeback? Can the regional banks find some stability? Can commodities rise…again? Are the discount stores no longer a discount stock?
Let 2012 begin.