@ FIFO_kid2: Thanks for pointing out the collapsing wholesale price of eggs - obviously this is important to CALM's business (!)
One thing I don't yet understand is whether their large buildup in retained earnings can compensate for the highly cyclical nature of the business over the coming two quarters?
Frankly, I agree with your thesis about an earnings drop. That being said, I also like that corn prices are down, which is a major expense for CALM. I find it worth reiterating that short interest is now very high, and that not everyone can win on that trade - in fact, if there is a *minor* earnings surprise, or for whatever reason if egg prices don't remain down, CALM could pop on a squeeze. It looks like a reasonably run company, so worst case, I follow the cycle through its end, and have a margin of safety in good management and a well-run business ... I opened a small position today; we'll see how it plays out.
Best of luck! At least one of us will likely make money here :)
Happy trading,
GDV |
