What Did You Buy Today?

[rayray]

FLO
CALM

new buys

[Jimbo]

(08-11-2016, 09:24 PM)rayray Wrote: FLO
CALM

new buys

I'm looking at CALM also, just a bit lower and it will hit my number.

[EricL]

(08-12-2016, 01:00 AM)Jimbo Wrote:

(08-11-2016, 09:24 PM)rayray Wrote: FLO
CALM

new buys

I'm looking at CALM also, just a bit lower and it will hit my number.

I'd be careful on CALM. Egg prices are still near historical lows, they lost $0.22 per share last quarter, and earnings estimates for next quarter have been cut from $0.83 to $0.24 over the last 90 days. This is a cyclical stock, and I'm not sure we've seen the bottom of the cycle yet.

I don't own, but I've seen it mentioned often lately due to the price drop, and just wanted to make sure people know what they are getting in to. Yes its seen a lot of growth in the last 5 years, but it still resides in a cyclical industry.

[Rasec]

Why are eggs cyclical? Shouldn't they be"commodity like"? At least here at home it's always ~12 per week, zero growth prospects but steady income

[EricL]

Directly from Cal-Maine's website:

Volatility of Egg Prices
Cal-Maine's operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside of our control. Small increases in production or small decreases in demand can have a large adverse effect on shell egg prices. Shell egg prices trended upward from 2002 until late 2003 and early 2004 when they rose to historical highs.

In the early fall of 2004, the demand trend related to the popular diets faded dramatically and prices fell. During the time of increased demand, the egg industry had geared up to produce more eggs, resulting in an oversupply of eggs. Since 2006, supplies appear to be more closely balanced with demand and egg prices again reached record levels during 2007 and 2008. Egg prices had  subsequently retreated from those levels due to increases in industry supply before reaching new highs in 2014.  In 2015, egg prices rose again due in part to a decrease in supply caused by the avian influenza outbreak in the upper Midwestern United States beginning in April 2015.  There can be no assurance that shell egg prices will remain at or near current levels and that the supply of and demand for shell eggs will remain balanced in the future.

Retail sales of shell eggs are greatest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in shell egg production during the spring and early summer. Shell egg prices tend to increase with the start of the school year and are highest prior to holiday periods, particularly Thanksgiving, Christmas and Easter. Consequently, we generally experience lower sales and net income in our first and fourth fiscal quarters ending in August and May, respectively. As a result of these seasonal and quarterly fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful comparisons.

Here is the 15YR earnings history from FAST Graphs. Notice the peaks and valleys in earnings over time.
   

Now please don't think I'm saying the CALM isn't a good company. It has low debt and appears to be very well run from a quick read through of its website and investor presentations. I'm simply saying that you need to know what you are buying, and be prepared for a volatile ride. Long-term it may be a good stock to buy and hold, but with volatile earnings there tends to be some investors who buy all the way up and then when it crashes they sell at the bottom for a loss.

[ChadR]

Picked up 107 shares of FLO today. Hard to pass it up at less than $15/share.

[crimsonghost747]

I took a good look at CALM about a year, maybe a year and a half ago. I really can't remember why I decided not to buy it, as far as I can remember most of the numbers were looking alright. But there was something that made me back off... maybe it's time for a new look. I'd just love to remember what it was that I didn't like the first time around.

[Rasec]

(08-12-2016, 01:27 PM)EricL Wrote: Directly from Cal-Maine's website:

Volatility of Egg Prices
Cal-Maine's operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside of our control. Small increases in production or small decreases in demand can have a large adverse effect on shell egg prices. Shell egg prices trended upward from 2002 until late 2003 and early 2004 when they rose to historical highs.

Fantastic this thing called "Economy", thanks for the great insight! Supply is likely more volatile than demand though I never lost a second thought of how supply could be affected in this scale.

[Caversham]

I haven't looked into CALM much, but in my mind there is little difference between owning CALM and owning an ETF that tracks egg prices. Because of this, I do not understand DGIers interest in CALM. Investors basically have no clue the amount of dividend income they will receive since it is entirely dependent on the price of eggs. It violates the "steady income, steady income growth" principle, one of the fundamental tenants of DGI.

[benjamen]

I initiated a position in FLO today. The lawsuit may hurt short term, but it doesn't change the long term prospects. I think the 30% YTD pullback is an over reaction.

[Rasec]

Added to DIS and BA during the weekend.

[rayray]

(08-12-2016, 08:45 AM)EricL Wrote:

(08-12-2016, 01:00 AM)Jimbo Wrote:

(08-11-2016, 09:24 PM)rayray Wrote: FLO
CALM

new buys

I'm looking at CALM also, just a bit lower and it will hit my number.

I'd be careful on CALM. Egg prices are still near historical lows, they lost $0.22 per share last quarter, and earnings estimates for next quarter have been cut from $0.83 to $0.24 over the last 90 days. This is a cyclical stock, and I'm not sure we've seen the bottom of the cycle yet.

I don't own, but I've seen it mentioned often lately due to the price drop, and just wanted to make sure people know what they are getting in to. Yes its seen a lot of growth in the last 5 years, but it still resides in a cyclical industry.

This is exactly why I initiated a partial investment in CALM, I've been watching this company for over a year and decided now, for me, was a good time to invest. I'll be watching for more volatility, in fact, I'm waiting for that overall market correction but it's not happening.