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June 15, 2005 Stock Pick: Cal-Maine Foods, Inc. (CALM)

Stock Price: $5.75

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing and sale of fresh shell eggs. The company is the nation's largest fresh egg producer.

Eggs were popular last year due to strong consumer demand related to the Atkins diet and other high-protein, low-carb diets. The popularity of such diets sent egg supply and demand out of whack allowing companies like Cal-Maine Foods to profit heavily. Now however, Net income has dropped to $2.4 million from $23.9 million a year ago.

CALM has been trending down steadily throughout this year and is finally beginning to bottom above its book value of $5.50. We believe although eggs may not regain all their popularity back that some will come back. Egg prices should begin to rise as supply is cut back.

It may be the right time to accumulate CALM when everyone else is despising it.

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