Cal-Maine Foods, Inc. (NASDAQ:CALM)

The 2012 drought upset the corn markets. Since corn is a major input cost for CALM and we lack commensurate supply/demand mismatch for wholesale eggs CALM profitability will suffer until at least Q3 2013 (calendar). The stock price will likely suffer with it, providing healthy buying opportunities. Meanwhile CALM can continue to use it's strong balance sheet to pursue it's acquisition strategy. When feed costs revert to their normal cycle and/or wholesale egg prices rise due to consolidation, CALM will reap an increasing proportion of the upside.

Trying my modified MFI screener, which adds EV/EBITDA and EV/FCF criteria.

I remember coming across CALM a few years ago and seeing the high short interest. Seeing as the stock has not cratered in the past few years, I believe this is a good short squeeze candidate (though I have to be surprised, the shorts have to pay the dividend unless they are covering prior to ex-div). I may buy in MRLP and collect the dividend. Another note - Whole Foods stock has recovered and is trading quite high. I will treat this as a trade along the same lines, but CALM has the low valuations to offset the one-product risk. Perhaps I am being naive here, and rising feed and energy prices, will eventually let the shorts win.

[EV/EBITDA < 11] [EV/EBITDA > 0] [ROE(%) Excluded: Nulls (-)] [EPS Yield-LTM(%) < 200] [EPS Yield-LTM(%) > 6] [ROE(%) > 6] [EV/Free-CF < 11] [EV/Free-CF > 0] [EV/Free-CF Excluded: Nulls (-)] [Market Excluded: NASDAQ OTC BB] [QuickRatio > 1.5] [QuickRatio Excluded: Nulls (-)]

CALM will struggle with higher feed prices but the company is so well managed and they've done a good job of converting customers to higher priced eggs over their lower priced ones. Since their dividend is based on earnings, they won't strap themselves paying divs when they lose money in a quarter but good quarters will handsomely reward the patient investor.

expansion, specialize, profitable: What's not to like?

could rock.

You never know

I'm swinging from bear to bull on this one. As noted previously, CALM rose in the past on overseas sales. When the dollar is weak, overseas sales are a no-brainer. There are two results from this dynamic: 1. domestic retail prices soar and 2. so do company profits. 2010 is looking a lot like 2006-7.

I'm in with real money.

Cal-Maine owns the farms involved in the salmonella outbreaks. They'll have trouble digging out from that, especially given the likelihood of fines and lawsuits due to their repeated problems with sanitation and health of their flocks.

screener for growth with dividends

Stock screen results. Using ROE, PE, LT debt/Equity, Current Ratio.

This will drop for a couple of more weeks as bad publicity sets in. Come holiday season and new years all will be forgotten and consumption will continue at pre bad publicity levels. Watch this and buy in the next week to see big gains in 3 to 6 month period.

Original pitch from "11 O'Clock Stock" series.

http://www.fool.com/investing/general/2010/09/13/todays-buy-opportunity-cal-maine-foods.aspx

To see more about the series, watch this video from co-founder Tom Gardner:

http://www.fool.com/investing/general/2010/07/22/introducing-11-oclock-stock.aspx

Breakfast is the best meal of the day for everyone. Eggs continue to be a rich part of America's breakfast heritage. For baking all those delectable sweets that we are all so fond of, the eggs are the healthy part! Protein rich eggs! Yes, I believe this company will get through this egg scare without irreparable damage. With so many family members on board and owning stock in this company, it is a win, win!

This is one of my STARZ.
Here is the thought process on this STAR:
a) Divided rate over Zero
b) 3 Year Beta between -5 & +3
c) 15% + Insider ownership
d) No greater than -50% Growth rate for the last 3 years (tought= last couple of years so goo that insiders are still owning the stocks)
e) Current CAPS rating between 3 Stars & 5 Stars
Open to all Industries and Sectors screened this down to just 250 stocks. I like round numbers. 12 of them I already own through other screening tools. I tend to be somewhat conservative but looking for 3 things at this point in my investing:
1. Stability & Strength
2. Yield and Modest Growth
3. Strong Position within a sector regardless of whether the entire sector is strong or not. Each sector has to perform to some degree for the whole world economy to function. I am looking for 5 or more years down the road, ROI, and Growth.
Not looking for rockets, just stars. This is a Star!!

large producer

A well entrenched company, selling at an attractive price. The company's strong vertical and horizontal integration has led it to be the country's number one egg-product distributor.

Solid fundamentals, dividend, high short interest, small float, and small trading volume = short squeeze

owned this years ago

everyone needs eggs