1. Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Funds: 34
Short % of Float: 16.84%
Being the largest manufacturer and supplier of fresh shell eggs in the U.S., Cal-Maine Foods, Inc. (NASDAQ:CALM) supplies various conventional and specialty eggs. The company serves various grocery stores, club stores, and food service distributors across multiple U.S. regions. It promotes its products under leading brands such as Egg-Land’s Best, Land O’ Lakes, and Farmhouse Eggs.
Cal-Maine Foods, Inc. (NASDAQ:CALM) recorded net sales of $954.6 million for Q2 ended November 30, 2024. This marks a substantial increase from $523.2 million in the same quarter from the year before. In the same period last year, net income was $17 million, or $0.35 per share, which increased to $219 million, or $4.47 per diluted share during the quarter. The company profited from low supply levels due to Highly Pathogenic Avian Influenza (HPAI), causing surging rates, rising demand, and breakthrough sales volume. Accordingly, the sales for specialty eggs amounted to 120.2 million dozen, over a 25% year-over-year increase.
Furthermore, Cal-Maine Foods, Inc. (NASDAQ:CALM) Foods strives to make strategic investments to broaden its operations. The company plans to amplify its cage-free capacity, adding five new layer houses and two pullet houses across various states, costing approximately $60 million. Additionally, to facilitate the extended shelf-life of liquid egg products, the company plans to invest $15 million in the advanced development of its Georgia egg products processing facility. Looking ahead, by the next fiscal quarter, the company will intensify its production capabilities as it’s on track to bring an acquired processing plant and hatchery in Missouri online.
Cal-Maine Foods, Inc. (NASDAQ:CALM) had secured certain assets of Deal-Rite Feeds, Inc., which includes two feed mills and related operations in North Carolina, marking a significant expansion. By lowering feed expenses and enhancing supply chain efficiency for its regional shell egg operations, the acquisition aligns with the company’s strategy to optimize production costs. In addition to that, a $500 million share buyback program has been approved by the board to support shareholder value. Also, the company issued a quarterly cash dividend of $1.49 per share, in line with its variable dividend policy.
However, bearish sentiments have been driven by concerns over potential ownership restructuring, supply chain volatility, and ongoing risks from HPAI. This can be seen from the high short selling activity related to the stock, making it one of the worst farmland and agriculture stocks to buy according to short sellers, despite the strong performance of the company.
Overall, Cal-Maine Foods, Inc. (NASDAQ:CALM) ranks first on our list of the 10 Worst Farmland and Agriculture Stocks to Buy According to Short Sellers. While we acknowledge the potential of CALM, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CALM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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