January 4, 2017: Traders are buying Cal-Maine Foods on a potential recovery in egg prices. Following the 2015 avian influenza (AI)-related laying hen losses, USDA data shows the egg industry has repopulated farms with laying hen numbers beginning to approach pre-AI levels. However, market demand trends have not kept pace with the higher production levels. While retail customer demand has been steady, egg export demand has not fully recovered following the aftermath of the AI outbreak. There was also reduced demand for egg products, as many commercial customers reformulated their products to use fewer eggs when prices spiked, and have been slow to resume previous egg usage. Together, these factors have created an oversupply of eggs, and prices had fallen dramatically from the record high levels last year. Average customer selling prices fell about 50.7 percent year-over-year.
While the egg market has been in oversupply, recent USDA reports show the chick hatch has been down for three consecutive months over prior-year levels as egg production has dropped in response to lower demand. Now we are starting to see egg prices rise sharply.
Cal-Maine Foods Stock Chart
The Finviz screener settings used to find Cal-Maine Foods are: EPS growth this year 90% – 100%, EPS growth next year 350% – 400%, EPS growth past 5 years High (> 25%), EPS growth next 5 years High (>25%), Sales growth past 5 years Over 15%
Cal-Maine Foods is the largest producer and marketer of shell eggs in the United States. Cal-Maine Foods operates in a single segment, which is the production, grading, packaging, marketing, and distribution of shell eggs. In fiscal 2016, they sold approximately 1,053.6 million dozen shell eggs, which represents about 23% of domestic shell egg consumption. Cal-Maine’s entire flock of about 33.9 million layers and 9.4 million pullets and breeders is the largest in the U.S.