[imgcontainer] [img:YonderDowApril.jpg] [source]Daily Yonder[/source] This tracks the Yonder 40, the Dow Industrials and the S&P 500 since July 2007. [/imgcontainer]
Shelves at gun and outdoor equipment stores have been empty for the past several months, as Americans have been stocking up on their favorite firearms since the November election. There is a “bullet drought” in the country, and that’s been good for the Daily Yonder 40, the compilation of 40 stocks selected to mirror the rural economy.
The Yonder 40 is running well ahead of the other major stock indices, both this year and since it began in July 2007. Over the past 22 months, the Dow Industrials have lost 40%. The S&P 500 is down by 42.4%.
The Yonder 40, however, is off 31.2% since July 2007 — and the 40 stocks of companies that do much of their business in rural America are running ahead of where they were when this year began.
(The chart above tracks the three indexes since July 2007. The Yonder 40 is represented by the green line.)
Several groups of stocks have been moving up over the past several months, but none have done as well as those companies that produce or sell firearms. Cabela’s, the giant outdoor store, is up 13% since the beginning of April and is now trading at levels it hasn’t seen since last October. Hunting equipment — especially ammunition — accounted for a third of Cabela’s fourth-quarter revenue.
(To see how all the Yonder 40 stocks have fared since the beginning of April, go to the next page.)
Sturm Ruger, the gunmaker, is down a bit for the month of April, but the stock had nearly doubled between the beginning of the year and mid-month.
Stories about Americans stockpiling guns and ammo have appeared since November, when Barack Obama was elected president. There is a fear among some gun-owners that a Democratic administration will tighten gun laws. Even in Democratic-leaning Austin (Texas), store shelves have been emptied of .380-, .45-, .357- and .38-caliber ammunition.
Cabela’s stock took off in mid-April, after a story in the Wall Street Journal published a story about the run on guns and ammo. The Journal story reported that the Federal Bureau of Investigations had conducted 4 million background checks during the first three months of this year, up 27% from last year.
There’s been other news recently among Yonder 40 stocks:
• Peabody Energy, the large coal miner, made more money while mining less coal. Revenue for the last quarter went up 15% as production dropped 2.1%. The company is benefiting from long-term contracts that locked in higher prices. It recently lowered its prediction for production over the next 12 months.
• Food companies are advertising the value of their products during this recession. Research by Campbell’s, the soup company, has found that some consumers have limited shopping to the 1st and 15th of the month — paydays. People are dining out less and obeying their shopping lists. DY 40 member ConAgra Foods, which hadn’t advertised its Banquet frozen food dinners in more than a decade, began touting a new line of Banquet meals prices selling for $1.50. Kraft is advertising Kool-Aid for the first time in 11 years.
• Mohawk, the carpet maker, has been beaten and battered as housing sales have slumped. But the company projected higher earnings and the stock is up 43% this month.
• Workers at Smithfield’s bacon plant in Wilson, North Carolina, voted against joining the United Food and Commercial Workers union. The vote was 338 to 181. The union had won a vote at a hog processing plant in nearby Tar Heel, N.C., last year. North Carolina has the lowest number of unionized workers.
• Gaylord Entertainment (owner of the Grand Ole Opry) is up 47% so far this month. The stock had been battered by fears that the recession would reduce travel.
• Tractor Supply reported better than expected first quarter earnings and a 4.2% increase in same-store sales.
Here is how the Daily Yonder 40 stocks fared during the first full three weeks in April (April 4 through April 24):