The case for Cal-Maine Foods

Cal-Maine Foods Inc is one of the best value buys I've seen in 10+ years of my being a true Graham-and-Doddsville Value Investor. On a profitability basis, they generate 20-25 bucks per share in earnings. Their share price is under 90 bucks a share right now. Their P/E is less than 4x, which is obscenely cheap and unheard of in today's cash-flooded investing environment. This company sells eggs. Period. That's it. The same eggs you buy at the grocery store to fry up on the grill on a Saturday morning. They dominate the U.S. market share. If a regular, blue-collar American citizen is walking into Walmart to buy some basic groceries, they are probably buying Cal-Maine eggs without thinking about it. Cal-Maine Foods is the #1 egg producer in America. They dominate the egg market, over all of their competitors. They have a ridiculous moat. Again, I emphasize, they are *number 1* in the egg market. Cal-Maine's balance sheet is almost *under* leveraged, which you could almost argue is a problem because they could be under-allocating capital. It's funny that such a good thing could almost be thought of as a problem. The funny thing about it is they have not a single penny in debt and they generate so much god damn fucking cash it isn't even funny. Their entire balance sheet has no leverage and is rich with cash. As a business, all they do is generate cash. Investors are fearful of the cyclical nature of their business, but even if their sales revenue pulled back 30% I wouldn't really be worried about profitability or financial health. The core operations are just too dominant over their competitors. I think people underestimate that in rough, recession times, when consumers are looking for cheap ways to feed their families, they will by cheap protein sources like eggs instead of buying chicken and steak. Their business operations are rock solid. They're gently (I emphasize the word gently) buying back shares and reducing the # of share outstanding, quarter by quarter. If there's a single risk, it's that the controlling family stake (The Adams Family) is gently reducing the ownership their family trust owns. However I argue they're getting out at a profitable time and the current CEO and Board of Directors has a clear path forward and this is a lucrative time for new and existing shareholders. They generate obscene levels of free cash flow and reward shareholders with a variable dividend policy, which after looking into extensively I think makes a ton of sense. This is one of the best value buys I've seen in my life and I've gobbled up a ton of shares in the last year and a half. I plan to continue to buy shares in this company. Their moat over competitors makes sense. Their business plan makes sense. Their ownership structure and ability to reward shareholders makes sense. This is a once in a decade value buy.