CALM: Eggs Are Good For Your Portfolio Too


When I went shopping on Tuesday morning I was surprised at how expensive groceries have become – especially the price of eggs. As you can see in the receipt above I paid $8.48 for 18 eggs. I learned from a WSJ article in this morning’s paper that that’s due to inflation and an avian flu outbreak that’s led to the destruction of more than 43 million egg laying chickens this year (“Egg Producer’s Sales Soar”[SUBSCRIPTION REQUIRED]).

While I’ve always been a fan of eggs for breakfast I think today might be a good time to add them to your portfolio as well. Cal Maine Foods (CALM) – the largest producer and distributor of eggs in the US – reported earnings Wednesday afternoon. While the numbers came in short of expectations and the stock is down in the premarket, that just provides a nice entry because the business is on fire and poised to continue that way in my opinion. In fact CALM is one of the best performing stocks around this year, up nearly 70%.

Revenue was +110% in the quarter as the net average selling price for a dozen eggs increased to $2.709 from $1.365 a year ago. EPS of $4.07 compares to 2 cents a year ago. I don’t see why CALM can’t earn $10/share in 2023 which works out to a 6x multiple based on yesterday’s closing price of $62.19. CALM is also a defensive play in what I anticipate to be a bad macro environment next year. While you might cut back on eating out, apparel and travel, are you really going to stop buying eggs?

So eat some eggs for breakfast and consider adding them to your portfolio as well via CALM.

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