[imgcontainer right] [img:bristoljumper.jpg] [source]Bristol Motor Speedway[/source] A member of the “Red Bull Air Force” jumped to the Bristol Motor Speedway before the start of the 2008 Sharpie 500. NASCAR is losing the attention of young men — although not for the lack of trying. [/imgcontainer]
We knew rural America was aging. But NASCAR?
Turns out that NASCAR has a young man problem — as in, not enough of them. There has been a 29 percent decline in 18 to 34 year old men watching stock car racing on television this year. And there are fewer young men in the cars.
“The biggest problem facing NASCAR is that the young males have left the sport,” said David Hill, Fox Sports Media Group CEO. (Fox is paying $4.5 billion to carry NASCAR through 2014.) “And if I was NASCAR, and I was an owner (of a race team), it would be something that I would be burning the midnight oil on a nightly basis, worrying where they’ve gone and how do I get them back.”
Then again, why stop with young men? Attendance is down for NASCAR across the board. Racing venues are lowering prices to fill seats. Hill suggests that maybe races need to be shortened to attract easily distracted young men.
And several people suggested to New York Times reporter Viv Bernstein that NASCAR try to bring in younger drivers. When the flag dropped at Daytona last February, there wasn’t a single rookie behind the wheel. The last time that happened, the New York Times reported, was never.
There are only three drivers under 30 in the top 20 Cup standings. The cars are filled with drivers who came up in the ‘90s. (For reference, Jeff Gordon was 21 when he began Cup racing in 1993.) That generation of now-30-somethings is locked in to deals and there isn’t room for younger talent.
No wonder International Speedway, the owner of 13 racetracks (including Daytona and Talladega) has lost more than 9% of its value since the beginning of the year and is lowering forecasts.
Fortunately, for companies tied to rural America, the speedway business isn’t typical. International Speedway is one of 40 business in the Daily Yonder 40, stocks chosen to represent the rural economy.
Since the beginning of this year, the DY 40 is up over 9%. How does that compare to the rest of the economy?
Well, the Dow Industrials are barely positive for the year. The Standard and Poor 500 is down just a little more than 1%.
Averages are deceiving, however. The Yonder 40 is filled with big winners and substantial losers — just like the rest of rural America.[img:Julydy40.jpg]
Southwest Bancorp, for example has more than doubled its stock price since January 1, recovering value from substantial losses in the banking crises. The Great Plains banking company has the largest percentage gains for this year among the 40 rural stocks. (See the chart below for how each DY 40 stock has done in 2010.)
The biggest loser in the last seven months has been Dean Foods, the nation’s largest milk seller, down over 36%. How quickly things change. Just a few years ago, prices were up and milk was described as “white gold.”
Since the beginning of the year, 19 of the Yonder 40 stocks have lost value (meaning 21 have gained).
Let’s look at some of what’s happening in these companies.
• Over the past 27 years, shipments of firearms (handguns, long guns and ammo) have increased at an annual compounded growth rate of 5.5%. In the last five years, shipments of weaponry have been running at a 15.1% annual rate.
An article in Barron’s reports that this is due to “increased concerns about personal safety, potential adverse changes in legislation and an increase in overall interest, especially among women and first-time buyers.”
The number of first-time buyers has been increasing, and it seems that last year’s first-time buyers are coming back to restock. And women are an increasing segment of firearms customers. Interestingly, the number of hunting licenses has been declining for 20 years.
All this increased personal involvement with the Second Amendment has benefited Sturm Ruger, one of the DY 40. Since the beginning of the year, Sturm Ruger’s stock price is up more than 44%.
• Warren Buffett thinks long term. He invests as much in demographic trends as companies, writes Wall Street Journal reporter James Altucher, so it’s notable that Buffett is investing in a company that is a leader in providing clean water, Nalco Holding.
Buffett’s company, Berkshire Hathaway, is a Yonder 40 member. Nalco makes the oil dispersant used recently to deal with the Gulf oil spill. It’s interesting to us that Buffett sees water as an area for long term growth.
• Coal companies haven’t done that well this year. Both Walter Energy and Peabody are essentially even for 2010, after a very good 2009.
Recently, both companies have announced increasing profits and sales, based largely on the export of coal used to make steel. Not that stock prices yet reflect these reports, however. Coal stocks are lagging the DY 40.
• There have been plenty of press reports touting packaged food companies as good bets during a recession. People aren’t eating out as much, the theory goes, so they buy more food they can eat at home.
The packaged food companies on the DY 40 list haven’t done particularly well. Ralcorp is down slightly for the year and ConAgra is up slightly.
The reports are that price cutting has impacted balance sheets. Ralcorp, owner of Post cereals, has been in a price battle with General Mills and Kellogg and recently its stock has been dropping. Other packaged food companies also report so-so results of late.
• People don’t like cable television companies, reports a University of Michigan survey. (Duh!) They like DY 40 member DirectTV better. DirectTV is up over 11% this year.
• Poor Regions Financial. First the regional bank company, based in Alabama, had to work its way out of the banking crisis. Now it is dealing with the financial fallout from the Gulf Oil spill.
Regions has 1,800 branches in 16 states, including Florida, Louisiana, Alabama and Mississippi. The company figures the BP oil spill will cost it as much as $100 million.
Still, like Southwest, Regions is up this year, rising nearly 39%.
• Hot weather is good for utilities. A hot summer in the southeast has boosted profits for Southern Co. 6.6% in the second quarter. Southern’s stock price is up 6% this year.
• Tractor Supply has raised its sales and profits estimate for the rest of 2010. Good news, perhaps, for the rural economy?
Here is how the full DY 40 has done since the beginning of 2010: