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Cal-Maine Foods, Inc. Message Board

  • tcc0828 tcc0828 Aug 27, 2010 11:52 PM Flag

    Didn't this stock jump 15% last earnings report?

    When they reported .88 whooping the .64 estimate on July 26?
    This quarter is estimated at a laughable (-.02) and with higher prices brought on by the recent salmonella shortages from another company I think they'll whoop that estimate handily with something nice and positive.
    Perhaps we'll see about $36 when they report in about a month? I'd sit in this stock for a month to collect 15%!

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    • I must admit I have not been paying close attention latley as the stock has been flat for so long.

      Things do look like they are getting interesting again so I will do a little digging around and get back to you.

    • >>Fred instituted the dividend to punish the short sellers.<<

      Fred may also have wanted to get some $$’s to the wife and kids so they didn’t have to sell stock to avoid living stock rich/cash poor.

      I’m sure it was Fred’s intent to punish shorts, but not sure how effective the dividend is at punishing them. IMO price would rise more if cash was retained, than the dividend the shorts now pay.

      Chill, Any thoughts on Q1, Q2 or SE?

    • Fred instituted the dividend to punish the short sellers. No poison pill is required as Fred and his family have controlling interest in the company

    • The only problem with your thesis is that those high prices are coming only at the very end of the quarter (the coming earnings will reflect the quarter through August). Most of the quarter egg prices were way down. A loss of 2 cents would actually be welcome - I thought losses would be substatially more. I think the NEXT quarter is when they hit it out of the park. The hoopla over the recall will have passed (all of the affected eggs expired a long time ago, so I don't see any further related illnesses forthcoming), and prices should remain high, based on seasonal patterns. I will probably load up on Jan. calls at some point, using proceeds from selling Sept. 30 calls.

    • georgespelvin Aug 28, 2010 4:40 PM Flag

      This is a company whose stock price has been limited by a wide spread but not well thought out intuition that the stock price should be $5, which it was once.

      The facts are quite different. But the perception kept the price of the stock so low (from a P/E point of view) that the management, which owns the biggest chunk of stock, was forced to declare huge dividends to drive the price of the stock up.

      Dividends are punished by our tax code. They do not count as an expense to the company. They count as income. Then when the shareholders get the dividend they count as income again.

      Thus dividends are taxed twice. It is insane. In addition management of CALM owns only 30+% of the company. If they did not issue dividend but kept the money in the company and used it to grow, the beneficial impact to all of us AND them would be much better. But the marketplace did not believe in that thesis and the low share price resulted vulnerability for a hostile takeover.

      If you own a company and you don't pay yourself then the company pays taxes on that amount. If you do take money then the company gets an expense and you pay taxes. I know this because I have owned companies for FORTY years. How the American public tolerates this is beyond me.

      = = =

      As for what happens to this stock price in the future: It goes up. Management knows what they are doing. Although any of us can have one or two chickens in our back yards (even those without back yards), on a larger scale there are ever increasing barriers to entry all centered on issues of environment and cruelty to animals. None of these issues is going to away.

      Further, eggs are cheap sources of good protein, terribly easy to cook and use, and terribly flexible as ingredients in a huge number of other prepared foods.

      All of this results in relatively inelastic dynamics (demand is not terribly price sensitive within historic outer limits). This means, bottom line, that people do not buy more when the prices go down and they do not buy fewer when the prices go up.

      If the demand were more sensitive to price then the stupid US government would not be poking their noses into this issue. They would not have to. The market would take care of business.

      So I am bullish on CALM. Not to hold but to ride up, get out, wait for the sell off, wait for more bad news, then get back in.

      I have made more money on eggs than I have on natural gas, technology and war!

      Viva les oufs!

44.21+0.36(+0.82%)Aug 23 4:00 PMEDT