Cal-Maine Foods, Inc. (CALM): A Bull Case Theory

We came across a bullish thesis on Cal-Maine Foods, Inc. on r/valueinvesting by Ok-Bookkeeper-1615. In this article, we will summarize the bulls’ thesis on CALM. Cal-Maine Foods, Inc.'s share was trading at $81.40 as of January 28th. CALM’s trailing P/E was 3.44 according to Yahoo Finance.

Cal-Maine Foods, Inc., together with its subsidiaries, engages in the production, grading, packaging, marketing, and distribution of shell eggs, egg products, and prepared foods. CALM is viewed as an attractive cyclical opportunity following a sharp stock pullback, with the market potentially over-adjusting to near-term egg price normalization. The investment case rests on the belief that declining egg prices are largely reflected in the current valuation, while recent strategic actions provide a higher earnings floor than in past cycles.

Most notably, the Echo Lake Foods acquisition meaningfully diversifies Cal-Maine’s revenue base into value-added, higher-margin prepared egg products, reducing reliance on commodity shell egg pricing. Echo Lake generated roughly $240 million in annual revenue, representing about 15% of Cal-Maine’s current earnings power, and management has ample free cash flow to reinvest aggressively in its expansion.

Cal-Maine’s balance sheet strength further underpins the thesis, with virtually no debt and a dividend policy that flexes with profitability, preserving liquidity during downturns while rewarding shareholders during strong cycles. At a current P/E of roughly 3.3x, the stock appears deeply discounted relative to historical averages, even under conservative assumptions. A 50% decline in earnings would still imply a multiple near 6.6x, suggesting limited downside if conditions worsen. Operationally, the company benefits from reliable service, scale advantages, and a strong position across the U.S. egg market, despite lacking a traditional moat.

Risks remain, including highly cyclical earnings, exposure to volatile feed and egg prices, ongoing litigation related to alleged price manipulation, and structurally slim margins. However, management is actively addressing margin pressure by shifting the mix toward specialty eggs, which now account for roughly one-third of sales, and by expanding into higher-value downstream products. With guidance de-risked and the next earnings update approaching, Cal-Maine Foods presents a favorable risk-reward skew for long-term investors willing to dollar-cost average through volatility.

Previously, we covered a bullish thesis on Cal-Maine Foods, Inc. (CALM) by Charly AI in April 2025, which highlighted elevated egg prices, margin expansion, specialty egg growth, and balance sheet strength. CALM’s stock price has depreciated by approximately 12.17% since our coverage due to egg price normalization concerns. Ok-Bookkeeper-1615 shares a similar view but emphasizes valuation support and earnings durability from the Echo Lake Foods acquisition.

Cal-Maine Foods, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held CALM at the end of the third quarter which was 33 in the previous quarter. While we acknowledge the potential of CALM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.