Pick#2 Cal-Maine Foods (CALM)

After announcing our 1st pick last week, we decided the 2nd pick today. Following our golden rules, we vary the time of selection, business of selected picks.

CALM is the largest egg producer in US where the country faced an increase of egg prices during 2022. That allowed CALM to increase both revenues and profits. Net income gone up by more than 6,000% ! Yes, it is for revenues increase of 31%. The price of stock didn’t react for 2022 and only increased by only 52%. Dividend Yield is 9.4% which is an excellent return. The risk is relatively low because the stock was trading around 50 to 35$ during the years prior of 2022. Starting of 2023, prices of egg is going down, but still high and as the price trend for prices for the last 2 years was up, we don’t expect prices will take time to drop and even will stabilize in higher prices than last bottom .

Last month, Japan announced flu infection of 16 million birds and egg prices soared. The impact will not be resolved easily [Source1] [Source2], so still the world in general not stabilized. US prices may rise again heading into Easter, which is in April, due to generally strong demand around that holiday, experts said. There’s also a chance that bird flu could surface again at egg farms. 

Below is CALM prices for 5 years, easy to notice low reaction for the egg issues and huge profits increase.

Below is the Revenues and Net income quarterly and yearly.

Below is assets and liabilities for CALM with price to book ration of 2.45 which is again very attactive.

The stock didn’t really react for current situations because fight between long term and short term believers that the price will return where it was. From the trend below which is the CALM share price historically, it is easy to notice that the stock is one of the best for long term investments and it is waiting its next upper trend to new highs.

Wish you safe trading, be ready for our 3rd pick next week.