We recently published a list of 8 Worst Small Cap Agriculture Stocks to Buy. In this article, we are going to take a look at where Cal-Maine Foods, Inc. (NASDAQ:CALM) stands against other worst small cap agriculture stocks to buy.
To supply the world’s demands for food and raw materials, the agriculture sector—which includes growing crops and rearing livestock—is essential to global sustainability. According to data from the Business Research Company, the industry is predicted to expand at a compound annual growth rate (CAGR) of 7.9% from $14.36 trillion in 2024 to $15.50 trillion in 2025, demonstrating its continued importance as a pillar of the global economy. Despite its value, the industry has experienced structural changes throughout the years due to resource management, changing global demand, and technological improvements.
However, fears concerning stunted productivity and sustainability have appeared in recent years, creating obstacles for long-term growth. A significant shift in the sector has been the growing contribution of the Global South—Africa, Asia, and Latin America—which has accounted for 73% of world agricultural output by 2020. McKinsey & Company predicts that as these rising markets modernize their agricultural processes, their proportion of production will grow even more. This change has been fueled by advances in crop science, irrigation techniques, and mechanization, which have enabled larger yields with the same land resources. Furthermore, reducing inflation in the United States around the end of 2024 has helped reduce input costs, notably in energy, resulting in higher margins for agricultural producers.
Despite these encouraging signs, the industry’s efficiency, as measured by Total Factor Productivity (TFP), has slowed. The global TFP growth rate decreased from 1.6% in the early 2000s to 0.9% during the past decade. With food consumption expected to increase by 60% by 2050, sluggish productivity raises concerns about future food security, price increases, and increased environmental constraints. Likewise, The Farm Products sector has experienced negative year-to-date and one-year returns. In contrast, global food commodity prices rose in February 2025, driven by rising sugar, dairy, and vegetable oil costs.
To address these difficulties, the sector is focusing on sustainability-driven solutions, notably connected agriculture. This entails the use of advanced technologies to improve, manage, and regulate farming operations. Advances in digital technologies have made it feasible to collect and use massive amounts of data at low cost, hence increasing crop yields while reducing resource consumption, such as water, fertilizers, and seeds. According to Fortune Business Insights, the global connected agricultural market was valued at $1.84 billion in 2018 and is expected to grow to $7.22 billion by 2026, with a CAGR of 19.1% over the forecast period. In 2018, North America dominated the global market, accounting for a 34.06% share in 2018.
Given these characteristics, maintaining agricultural expansion would necessitate major investment in next-generation farming technologies and sustainable practices. According to McKinsey & Company, advances in agricultural technology have the potential to deliver a 25% rise in global output over the next decade while improving efficiency and lowering environmental impact. Meanwhile, the sector remains a crucial engine of the US economy, accounting for more than $1.5 trillion in GDP in 2023, or 5.5% of economic output.
Agriculture is the foundation of global economic stability, supporting billions of people globally. However, despite its central role, not all stocks in the industry have performed well.
Our Methodology:
For this article, we started by using Finviz screeners to identify stocks in the agricultural inputs and farm products industries. From this expanded list, we chose companies with strong market capitalization. Next, we looked at how many hedge funds were invested in these companies because we believe that stocks with a high level of hedge fund interest do well. Finally, we determined the short percentage of float for each firm, which represents the level of negative sentiment or short interest in the stock. The companies were then sorted in ascending order according to their short proportion of float.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of an organic egg being carefully washed and inspected before being packaged.
Cal-Maine Foods, Inc. (NASDAQ:CALM)
Number of Hedge Fund Holders: 34
% of Short Float: 11.20%
Cal-Maine Foods, Inc. (NASDAQ:CALM) is the largest producer and distributor of fresh shell eggs in the United States, offering conventional, cage-free, organic, and specialty eggs under the trademarks Egg-Land’s Best, Land O’ Lakes, and Farmhouse Eggs. The company’s products are sold to national grocery chains, club shops, independent supermarkets, and food service distributors in different regions of the United States.
Cal-Maine Foods, Inc. (NASDAQ:CALM) shared strong earnings for Q2 FY25 ended November 30, 2024. Net sales grew to $954.7 million, nearly doubling from $523.2 million in the second quarter of FY24, thanks to higher egg prices and increasing sales volume. The company sold 329.8 million dozen eggs, up from 288.2 million in the prior year quarter, with specialty egg sales increasing by more than 25% to 120.2 million dozen. Net income rose to $219.1 million, or $4.47 per diluted share, from $17 million, or $0.35 per share, in Q2 FY24. Production expenses per dozen fell 8.5% year-on-year, driven by lower feed prices. However, greater costs for outside egg imports negated some cost savings as the company struggled to meet demand despite industry-wide supply constraints.
Despite significant earnings growth, Cal-Maine Foods, Inc. (NASDAQ:CALM)’s stock is down 11.53% year-to-date as of the writing of this article, reflecting widespread volatility among the worst-performing small-cap agriculture stocks. The company is still dealing with uncertainties as a result of avian influenza, which caused the depopulation of 38.4 million commercial layer hens in 2024, affecting supply levels and driving price swings. Concerns about potential future outbreaks and their impact on production have contributed to a larger short percentage of float as investors remain wary of the industry’s stability.
Looking ahead, Cal-Maine Foods, Inc. (NASDAQ:CALM) is expanding its production capacity, with $60 million set aside for new cage-free facilities that will house 1.1 million more hens by late summer 2025. The company is also investing in its egg products segment, which will improve processing capabilities for liquid egg products with a longer shelf life. While industry-wide supply restrictions exist, the company’s size and strategic acquisitions enable it to navigate market changes while aiming for long-term growth despite immediate hurdles.
Overall, CALM ranks 2nd on our list of worst small cap agriculture stocks to buy. While we acknowledge the potential of CALM, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
