Cal-Maine Foods, a leading producer of fresh eggs in the U.S., has been a favorite among investors and gurus in preparation for Easter weekend festivities. The company, known for its Egg-Land’s Best, Land O’Lakes, and Farmhouse brands, has seen growth through mergers and acquisitions, expanding its product offerings to include organic, cage-free, and other specialty eggs. Despite facing challenges in the second quarter of fiscal 2024, such as lower egg prices, costs related to a lawsuit, and production loss due to avian flu, Cal-Maine remains a strong player in the market.
With Easter weekend approaching, consumer spending is expected to reach $177.06 per person on various holiday-related items, down slightly from last year due to inflation and other economic factors. The GuruFocus Aggregated Portfolio has identified Cal-Maine Foods as a consumer defensive company favored by gurus, making it a potential investment option for those looking to capitalize on holiday trends. While artificial eggs may be preferred by some consumers due to rising prices and convenience, traditional egg products are still popular for holiday meals.
Cal-Maine’s business model focuses on acquisitions and expansions to enhance its production capabilities. Recent acquisitions, including a broiler processing plant from Tyson Foods and assets from Fassio Egg Farms Inc., aim to boost the company’s cage-free egg production. Despite challenges in the market, such as lower egg prices and an avian flu outbreak, Cal-Maine has maintained a solid financial standing and operational performance. The company’s upcoming third-quarter results will provide further insights into its financial health and outlook.
Investors should consider the company’s strong balance sheet, which includes $568 billion in cash, cash equivalents, and marketable securities, with no long-term debt. Cal-Maine’s quarterly dividend yield of 5.05% and Piotroski F-Score of 5 out of 9 indicate stability and potential for future growth. The stock is currently trading around $61.78 with a price-earnings ratio of 6.67, suggesting it may be undervalued. Guru interest in the company remains mixed, with some gurus increasing their stakes while others have reduced or exited their positions.
Despite recent selling activity and disappointing quarterly results, Cal-Maine Foods has shown resilience in the market, gaining nearly 10% year-to-date and 15% over the past year. The company’s expansion efforts, strong financials, and dividend yield make it an attractive investment option for those looking to capitalize on consumer trends and holiday festivities. With a solid track record of growth and stability, Cal-Maine Foods remains a favorite among investors and gurus alike, offering value and potential for future gains.
