A Better Index to Measure the U.S. Economy
The Dow Jones Industrial Average turned 115 years old in May, and it’s showing its age. While the stock market index is widely cited by investors and journalists, it is way out of touch with the lives of American consumers and investors.
Consider that many of the 30 Dow components derive a majority of sales from international operations — and some employ more folks overseas than they do in America.
That’s no way to measure the U.S. stock market or the economy! That’s why we launched an innovative new feature called the Real America Index — our own index comprised of 50 stocks for 50 states.
Like the real American economy, a number of these stocks have struggled. But a handful have been going like gangbusters.
Let’s take a look at the best- and worst-performing Real America Index stocks (starting with the winners) as we enter the second half of the year.
Returns are as of market close 6/30/2011.
#3 Real America Index Stock – Goodyear
When you think about stocks that are booming in 2011, you may overlook this 110-year-old auto parts giant. But the fact is that Ohio-based Goodyear (NYSE:GT) has been burning rubber in 2011, tallying gains of over 41% so far this year!
The reason? Well, after some brutal years in the last decade, it appears that Goodyear could at last be finding new life. Fiscal 2011 is shaping up to be Goodyear’s first profitable year since 2007, thanks to streamlined operations and some painful cost-cutting measures.
What’s more, the prospect of increased worldwide demand for tires is improving as auto sales continue to climb back from their sharply depressed numbers recorded at the depths of the recession. And not only is America bouncing back, but Goodyear sales in emerging markets have been particularly strong.
#2 Real America Index Stock – Double Eagle Petroleum
The flip side of soaring crude oil prices is, of course, the soaring oil and energy sector. Take Wyoming-based Double Eagle Petroleum (NASDAQ:DBLE), which has skyrocketed 78% so far in 2011 compared with a measly 7% gain for the Dow.
Double Eagle is a small-cap company with a value of about $1 billion but has diverse energy revenue streams though coalbed methane, natural gas and crude oil operations. The prospect of commodity inflation raising rates for all forms of energy has meant bigger profits for Double Eagle Petroleum.
Those looking at key statistics may be a bit puzzled, considering DBLE swung to a 10-cent loss in the first quarter despite being profitable in the year-ago-period. But the fact is that the loss was due mostly to poor hedging investments related to natural gas and oil. Revenue was up, output was up, and the company is still growing. What’s more, engineering technology is improving all the time and allowing DBLE to extract more fuel more efficiently from its vast Wyoming holdings.
Get complete details on what makes Double Eagle Petroleum a Real America Index stock here. And to see how the rest of the stocks in the Real America Index stack up, view the interactive map.
#1 Real America Index Stock – Green Mountain Coffee Roasters
The American spirit of innovation, one of the criteria for entry into the Real America Index, is simply summed up by the idea of “building a better mousetrap.” So what about building a better coffee machine?
That’s exactly what Vermont’s Green Mountain Coffee Roasters (NASDAQ:GMCR) has done with its Keurig K-Cups, single-serve brewing devices that have caught on like wildfire. The gadget has everything going for it right now. The K-Cup line includes high quality offerings from brands like Starbucks (NASDAQ:SBUX) and Dunkin’ Donuts. K-Cups are vastly cheaper than buying retail at a café. And Green Mountain has the market all but cornered despite imitators cropping up with their own crazy single-serve coffee machines.
The result has been a breakneck run for GMCR stock — it’s up 900% since early 2008, including a mammoth 171% gain in the first half of 2011 alone! This red-hot stock is clearly not slowing down.
Get complete details on what makes Green Mountain Coffee Roasters a Real America Index stock here. And to see how the rest of the stocks in the Real America Index stack up, view the interactive map.
3rd Worst-Performing Real America Index Stock – Bancorp South
Another obvious loser in the Real America Index so far in 2011 has been Mississippi financial stock Bancorp South (NYSE:BXS). It has been the perfect storm for this stock and its shareholders.
First, Bancorp South remains saddled with much more bad debt than other regional banks. The problem is the painfully sour Mississippi economy, where some areas suffer jobless rates as high as 19%. Of course, Bancorp South isn’t without blame here since it extended the bad loans during the boom.
The good news is that the financial stock is sound, and even amid the worst of the financial crisis, it was posting annual profits. But the bad news is that, like the big financial stocks, revenue is stagnant, and investors are skittish. Throw in the fact that the company announced in April it would slash its quarterly dividend from 22 cents a share to a meager penny, and you can understand why nobody is buying.
Bancorp South is off 22% so far in 2011, with the bulk of the losses coming after the April dividend cut.
Get complete details on what makes Bancorp South a Real America Index stock here. And to see how the rest of the stocks in the Real America Index stack up, view the interactive map.
2nd Worst-Performing Real America Index Stock – Hawaiian Holdings
It’s not hard to imagine why regional airline Hawaiian Holdings (NASDAQ:HA) has hit headwinds in 2011. Expensive crude oil prices have really eaten into the airline industry’s profits, and weak consumer spending trends mean that the flying public isn’t creating the demand that it was several years ago — especially to pricey travel destinations like Hawaii.
No surprise then that HA stock is off more than 28% at the midway point of 2011. Of course in the last few days, Hawaiian Holdings has been climbing back to higher altitudes as crude oil prices have abated — and coupled with a profitable first quarter that beat expectations, things could continue to improve in the second half of the year. Of course, airlines are notoriously volatile, and a regional jet carrier like Hawaiian Holdings is sure to hit further turbulence ahead.
Get complete details on what makes Hawaiian Holdings a Real America Index stock here. And to see how the rest of the stocks in the Real America Index stack up, view the interactive map.
Worst-Performing Real America Index Stock – Daktronics
The business of sports has had a tough go in the last year or two. On top of weak consumer confidence sapping ticket sales and concessions, labor problems loom in the NFL — with the likelihood of a work stoppage in the NBA next year, too. There’s still a lot of money to be made via football, basketball and baseball, but clearly there’s not as much as there used to be.
That’s why South Dakota’s Daktronics (NASDAQ:DAKT) has been sacked for a steep loss. In February Daktronics took a steep dive after projecting lower sales in the near term, and it made good on that poor projection in its most recent earnings report. The maker of high-tech scoreboards and ad displays hasn’t had the orders or the profits that it did in the boom times.
Back in 2008, Daktronics was behind the world’s largest HD display at the time — a 105-foot tall and 85-foot wide scoreboard for the Kansas City Royals that boasted a total of 8,925 square feet. Obviously with labor issues in the NFL and tight times for consumers and businesses alike, Daktronics hasn’t had those kind of contracts lately. As a result, DAKT stock is off almost 33% year-to-date.