TRADE ALERT

TRADE INSTRUCTIONS

Date: September 7, 2016

Name: Cal-Maine Foods

Symbol: CALM

Type: Open

Limit: Buy below $45

TRADE TARGETS

Holding Period: 183 days

Average Return: 11.1%

Annualized Return: 22.3%

TRADE RATIONALE

Cal-Maine Foods is the largest egg producers and marketer in the U.S. It sells its eggs to grocery store chains and food distributors including major brands such as Egg-Lands Best, Land O Lakes and Farmhouse. Its largest customer is Wal-Mart which accounts for 25% of its total revenue.

This alert was triggered by Cal-Maine’s exceptionally strong balance sheet combined with consistent growth in earnings which have increased by more than 200% over the last ten years on a per share basis. Trading at only 12 times forward earnings, the stock appears undervalued compared to its ability to consistently grow earnings over time.

The commercial egg market is rebounding from the Avian flu crisis of 2015, which resulted in over 10% of the domestic poultry population being exterminated to prevent the spread of the virus. That drove egg prices up at the same time demand for eggs was on the rise due to .