It’s no secret that inflation continues to run rampant, with the recent spike in egg prices still surprising many.
Data from the Bureau of Labor Statistics show that the average price of a dozen large Grade A eggs in one U.S. city reached $4,250 in December 2022, more than doubling from the $1,788 consumers paid a year earlier.
“Bird flu” may be the main factor of price increase. According to the Centers for Disease Control and Prevention, highly pathogenic avian influenza, first detected in January 2022, has resulted in the deaths of nearly 58 million chickens and turkeys.
Brian Moscogiuri, global trade strategist at egg supplier Eggs Unlimited, called the situation “unprecedented.”
“It’s a supply disruption, an ‘act of God’ type of thing,” Moscogiuri said.
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Others see multiple factors behind the rise in egg prices.
“When you look at fuel costs going up and feed costs going up by 60%, labor costs, packaging costs – all of those things… those are bigger factors than bird flu. sure,” said Emily Metz, president and CEO of the American Egg Board trade group.
Food prices generally continue to rise. While this will put a dent in household budgets, it may present an opportunity for savvy investors.
In fact, some food stocks are already helping investors buck the downtrend in the market. Let’s take a look at two of them.
Cal-Maine Foods
Cal-Maine Foods (NASDAQ:CALM) is the largest producer and distributor of shell eggs in the United States. The company has been in business since 1957 and sells most of its shell eggs in the Southwest, Southeast, Midwest and Mid-Atlantic regions of the country. USA
The ongoing market downturn has hurt numerous stocks, but Cal-Maine Foods investors aren’t complaining. The stock is up 35% over the past 12 months, in contrast to the S&P 500’s double-digit decline over the same period.
As you might expect, higher egg prices benefit the egg producer. For the fiscal quarter ended November 28, 2022, Cal-Maine Foods achieved record net sales of $801.7 million, an increase of 110% year-over-year.
The company also posted record quarterly net income of $198.6 million, or $4.07 per diluted common share.
“Significantly higher sales prices, our continued focus on cost control, and our ability to adjust to inflationary market pressures led to improved gross profitability with a gross profit margin of 39.6% for the second quarter of fiscal 2023, another record for Cal-Maine. Foods,” the company’s chief financial officer, Max Bowman, said in a press release.
If egg prices remain high, this established egg producer will likely continue to flourish.
Read more: 4 Simple Ways to Protect Your Money from Hot Inflation (Without Being a Stock Market Genius)
Post Holdings
Post Holdings (NYSE:POST) is a consumer packaged goods holding company. Although the current company was spun off from Ralcorp Holdings in 2012, its history can be traced back to 1895, when CW Post created a breakfast cereal called Post Toasties.
Today, the company has a portfolio of businesses including Post Consumer Brands, Weetabix, Michael Foods and Bob Evans Farms.
Business is growing rapidly. Post Holdings’ net sales for fiscal 2022, which ended Sept. 30, were $5.85 billion, up 17.5% from fiscal 2021.
The biggest growth driver was the company’s Foodservice segment, which primarily includes egg and potato products. Net sales from the segment increased 29.7%, or $479.4 million for the fiscal year.
The result was even more impressive. The company’s net income from continuing operations was $735.0 million for fiscal 2022, a 600.7% increase from $104.9 million in the prior year.
Like Cal-Maine Foods, Post Holdings is bucking the stock market selloff: shares are up 25% over the past 12 months.
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