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Tickers in this Article: WLT, DF, RAH, TSCO, MON, WMT, FDO
In January 2009, I highlighted the Yonder 40 Stock Index, a group of 40 stocks either doing business in rural America or headquartered there. The index, which first came to be in July 2007, lost less than all the major indexes in 2008. Now we'll look at its performance in the 22 months since. It's clear that rural America keeps rolling along. (To read Will Ashworth's 2009 article, check out Investing In Small Towns Can Beat Major Indexes.)

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Beating the Indexes
When comparing stocks across all market caps, I generally like to use the Dow Jones US Total Stock Market Index, which measures every U.S. stock with readily available prices. It's the broadest index that I'm aware of and represents the most realistic and representative benchmark out there. By my calculations, in the 22 months since January 14, 2009, the benchmark is up 46%, 400 basis points less than the Yonder 40. Leading the 40 stocks in terms of performance is Walter Energy (NYSE:WLT), up 358%, while the worst performing stock is Dean Foods (NYSE:DF), down 41%. Of the 40 stocks, 31 have positive returns for the 22-month period with 20 outperforming the index, including 12 that have doubled in price or more. For good measure, the Yonder 40 also beat the S&P 500 by 9.6% points and the Dow Jones Industrials by 14.4%. That's some performance.

Previous Picks
In my 2009 article I recommended three stocks I thought would do well that year: Ralcorp Holdings (NYSE:RAH), Tractor Supply Co. (Nasdaq:TSCO) and Monsanto (NYSE:MON). They've been a mixed bag with Tractor Supply up 154%, Ralcorp up 12% and Monsanto down 20%. Tractor Supply and Ralcorp continue to be favorites of mine. Monsanto delivered weak fourth quarter and year-end results October 6. Although its earnings per share in 2010 was $2.01 and well off the $3.78 in 2009, its guidance of $2.72 to $2.82 a share in 2011 is more than adequate. With Monsanto's stock off 26% year-to-date, 2011 could be a strong rebound year for the St. Louis agricultural conglomerate.

In addition to those picks, I also suggested investors look at 2008 Yonder 40 winners Walmart (NYSE:WMT) and Family Dollar Stores (NYSE:FDO). Both are up since then, Walmart by 9% and Family Dollar 74%. Although Walmart's stock has struggled in recent years, there's no denying its place in the world of retail. It'll come around. As for Family Dollar, it and the other dollar-type stores will continue to do well in this stagnant economy. I like both companies' chances in 2011 and beyond.

Future Picks
As I said in the paragraph above, I love Tractor Supply and its niche retail business. Its earnings might falter once in awhile, but generally they're a capable bunch. It's my growth pick, as the future looks bright on the expansion front. My value pick is Dean Foods, whose milk and milk-substitute brands include Silk, Horizon Organic and Land O'Lakes. The number one producer of fluid milk in the U.S., DF's stock is cheap right now, trading at 0.2 times sales compared to an industry average of 1.4. In the past 10 years, its free cash flow has never been less than $100 million. Texas First Investment Management CIO Douglas Cannon believes Dean possesses an excellent combination of solid company and long-term appreciation potential. Although its stock is off 43% year-to-date, its executives have been buying. That's always a good sign.

Bottom Line
There seems to be a foregone conclusion that rural America is disappearing. The Yonder 40 shows this isn't the case at all. (For more, check out America's Biggest Food Companies.)

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