The decline in the sales of compact discs has been well-documented in the media and investors in companies in the industry have suffered tremendously. Transworld Entertainment (NASDAQ:TWMC), owner of mall-music stores, has seen its stock tumble from $14 per share to its current price of $5.45 in less than two years. Handelman (NYSE:HDL), which distributes CDs to Wal-Mart, has seen a similar decline. EMI recently warned that it would report lower profits due to weaker than expected sales of Robbie Williams' (my favorite singer by the way) new album and a remix album by the Beatles.

But there is genre that is growing: country music! According to piece in the new issue of Fortune, country music sales were up 12% for 2005, compared to a staggering 29% decline in sales of urban albums and an 8% decline in alternative rock CDs. Apparently Toby Keith fans are less interested in the iPod than followers of Eminem and Green Day.

What does this mean for investors? I think that a company like Handelman, which sells at Wal-Mart, may fare considerably better than companies selling music at hipper locations. Country music is big in the red states, as is Wal-Mart. On a per capita basis, Wal-Mart is four times more concentrated in red states than in blue, according to a piece about Wal-Mart in Fortune.

However, what if country music fans are just slow to catch up with the new technology? If that's the case, those CD sales may flatten quickly and then see a decline similar to that urban music has seen in recent years. But if country music is here to say, HDL may be worth a look. The stock sports a yield of 4.73%, a price-to-book ratio of about one half. It's looking like a classic contrarian play, although value investors have been saying it's cheap for awhile; in fact, they were saying it was cheap when it was over 10. But now it really might be cheap.