3SOF

Let´s go back to CALM short position.

For me, as an investor who sees great upside potential on CALM prices, the fact that this stock is heavily shorted is very good as fundamentals are great and a squeeze is very likely. I am only puzzeled about the short term as the shorts should be covering. We are talking about some 6.6 million short shares in December with total value of around $180M (more than 40% of float). I think something is very wrong here.

Hi, wrangler

Technical analysis is great and everything that is important is discounted on the prices. It´s like having the whole story until today.

However, it is important for us to know what really is the story behind the prices and its possible consequences in the future, maybe not yet completely discounted on these prices.

In fact, ADST results are still very negative and the indecision that followed its publication on the 15th Nov, with a new downtrend later on may be happenning again. I don´t see any new facts and it can possibly be a kind of trap.

Unless this period of end of year - new year would be a time of optimism (as has happened often before). But I wonder about an adequate folow through. We´ll see!

By the way, a Happy New Year for you all!
swinger

Thank you, kslifka and BigSully1! I feel at home here that´s for sure: this site is doing a great job and an excellent performance and the members I have read so far are great, with excellent technical quality.

Now, another post about this CALM company, which is really a case study.

"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.  Burt shell egg prices have experienced an upward trend since 2002." 

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."
 
So, we are now analyzing a "good" quarter as should be also the next one. And don´t forget that CALM has a growth strategy trough acquisitions and production of value added specialty shell eggs.

As the company is doing business for many years it is fantastic the growth level obtained on the quarter ended December 1, 2007. Net sales of $223.7 M, 78% more than same quarter last year, and net profits of $40.2M ($1.69/share) - almost seven times more than a year ago.

Costs rise on the last 12 months but gross profit rose much more and it seems that it will happen again in the future through growth and normal pricing power of the company.

The average P/E of the sector is 18.85 and if we work with half (let´s say 9) it is clear that CALM is worth at least 60. In fact, from here and even not considering growth as we are in a strong quarter, we have 1.69 x 4 x 9 = 60.84.

I think CALM will go there, as those white candles will arrive soon but ... calmly, in a sustainable way, which is better than too quickly.

Though it is not a company so up-to-date as solar energy, internet innovation and so on, I would consider it very solid and if the United States are headed for a slowdown (or light recession?) here we have a company that will suffer much less than average.

What do you think?

Regards
swinger

Hi, everybody! It´s my first post here and a real pleasure to me as this is a high quality forum.

You only have to forgive my poor English. 

So, kslifka, I think the answer to your question is not dificult:

1. First, it was really too much that open and high. But the volume is there (4,45M), by far the highest for at least 3 years.

2. Second, if you look closely today´candle is all well outside Bollinger Bands.

3. And don´t forget that in 2007 the price of CALM climbed almost four times, from around 8 to a high of 31.45!

4. I think there is plenty of room to the stock to reach new highs soon (today made a higher high anyway...)

5. MACD and RSI both assure that we may have a very good upside in front of us.

Cheers,
Swinger

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