A.J. Noronha of Desai Capital Management presented his thesis on Cal-Maine Foods (US: CALM) at Best Ideas 2026.
Thesis summary:
Cal-Maine Foods, a 70-year-old Nasdaq-listed company, is the leading US specialty egg producer, with market share about twice that of its nearest competitor. It surfaced as a surprise in A.J.’s value screens late in 2025: a consumer defensive business with a $3.5bn market cap against $4.2bn of revenue. Many shoppers know its brands, Eggland’s Best and Land O’Lakes, far better than the parent, which is why A.J. calls the value hidden in plain sight.
Eggs are a commodity, but A.J. sees a defensible moat in brand loyalty, scale and vertical integration spanning feed, farms, processing and distribution; a recent feed-company acquisition helps control input costs. Integration and a national footprint also aid biosecurity against avian flu. Distribution reaches nine of the top ten US retailers and eight of the top ten foodservice providers, and A.J.’s visits to grocers found the company’s brands prominently placed at the front of the egg case.
Demand tailwinds include rising protein consumption and a revised food pyramid that favors protein and healthy fats over grains. Egg prices fell nearly 50% over the past year, but A.J. notes eggs remain far cheaper than beef, near all-time highs. Prepared foods, the smallest segment, jumped from $19m to $156m over the last two quarters, and higher-margin items such as egg whites, wraps and breakfast sandwiches should lift the mix. The US-only focus limits reach but avoids tariffs and overseas supply chain risk.
A net cash position of about 25% of the market cap gives A.J. an objective floor for value and funds acquisitions, from feed inputs to ready-to-eat breakfast producers. The dividend targets about a third of earnings, recently a yield above 10%, and is paid from profits. A buyback announced about six months earlier equals roughly 7-8% of the market cap, with $75m repurchased last quarter. Long-tenured management, including a president of almost 30 years, values stability.
The shares recently traded near $74, at the bottom of a 52-week range that peaked at $126, or 1.3x book, 0.90x sales and 3.3x trailing earnings. A.J. sees the stock about 40% below intrinsic value and targets $120 to $126 over two to four years, a steady climb supported by dividends. The main risks are egg pricing, a very weak fiscal second quarter in which margins slipped from near 30% to about 22%, and avian flu, his black swan.
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Best Ideas 2026 was held from January 6-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
