"Cal-Maine Foods, Inc. is a producer and marketer of shell eggs in the United States. The Company operates through the segment of production, grading, packaging, marketing and distribution of shell eggs. It offers shell eggs, including specialty and non-specialty eggs. It classifies cage free, organic and brown eggs as specialty products. It classifies all other shell eggs as non-specialty products. The Company markets its specialty shell eggs under the brands, including Egg-Land's Best, Land O' Lakes, Farmhouse and 4-Grain. The Company, through Egg-Land's Best, Inc. (EB), produces, markets and distributes Egg-Land's Best and Land O' Lakes branded eggs. It markets cage-free eggs under its Farmhouse brand and distributes them throughout southeast and southwest regions of the United States. It markets organic, wholesome, cage-free, vegetarian and omega-3 eggs under its 4-Grain brand. It also produces, markets and distributes private label specialty shell eggs to customers."
New reports of Avian flu...it's worth going long here IMO.
CALM has huge operating leverage on rising shell egg prices. I have no clue if the sharp rise in egg prices is sustainable, but it's worth taking a position here on the off chance that it is. Operating leverage means that Cal-Maine could go up 50% in short order if it is. 2015 they clocked close to $7 a share in EPS, with fat high teens margins and huge cash flows.
On the downside risk, I think it is fairly limited here given the dominant position. If we see some incremental revenue growth, that will accrue to the bottom line in a big way (all else being equal). Of course, egg prices might not stay up here, in which case, you want to get out of the position.
New reports of Avian flu...it's worth going long here IMO.
CALM has huge operating leverage on rising shell egg prices. I have no clue if the sharp rise in egg prices is sustainable, but it's worth taking a position here on the off chance that it is. Operating leverage means that Cal-Maine could go up 50% in short order if it is. 2015 they clocked close to $7 a share in EPS, with fat high teens margins and huge cash flows.
On the downside risk, I think it is fairly limited here given the dominant position. If we see some incremental revenue growth, that will accrue to the bottom line in a big way (all else being equal). Of course, egg prices might not stay up here, in which case, you want to get out of the position.
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