Is Cal Maine (USA Stocks:CALM) low volatility a good sign for investors?
 | By Vlad Skutelnik | Macroaxis Story |
In the world of investing, the early bird often catches the worm. Cal-Maine Foods, a key player in the Consumer Defensive sector, has been catching the eye of savvy investors on the NASDAQ. With an Analyst Overall Consensus rating of "Buy" and a range of target prices from $45.05 to $54.95, the stock presents a compelling case for those looking to diversify their portfolios. Despite a recent loss, the stock's Day Median Price of $74.74 and a Possible Upside Price of $77.11 suggest there could be significant room for growth. As we approach the fiscal year end in May, understanding the stock's volatility and potential can help you decide if Cal-Maine Foods is the hidden gem your portfolio needs. Cal-Maine Foods is currently yielding an expected daily return of 0.3215%, with a risk level (volatility) of 1.3531% over the next 90 days. While some traders may overlook this volatility, it's important to consider the risks involved in investing in Cal-Maine Foods. We'll assess whether this volatility is likely to persist into November.
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Reviewed by Rifka Kats
Cal-Maine Foods stock exhibits a relatively high kurtosis of 4.89, indicating potential for significant price swings. With a maximum drawdown of 9.27, investors should be prepared for periods of volatility, but the stock's unique position in the farm products industry could offer rewarding opportunities for those with a higher risk tolerance.
Main Takeaways
Cal-Maine Foods has about $281.8 million in cash and generates $454.4 million in positive cash flow from its operations. This gives the company a cash-per-share (CPS) ratio of 2.88.Volatility is a rate at which the price of Cal Maine or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Cal Maine may increase or decrease. In other words, similar to Cal's beta indicator, it measures the risk of Cal Maine and helps estimate the fluctuations that may happen in a short period of time. So if prices of Cal Maine fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
How important is Cal Maine's Liquidity
Cal Maine financial leverage refers to using borrowed capital as a funding source to finance Cal Maine Foods ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Cal Maine financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Cal Maine's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Cal Maine's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Cal Maine's total debt and its cash.
Cal Maine Gross Profit
Cal Maine Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Cal Maine previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Cal Maine Gross Profit growth over the last 10 years. Please check Cal Maine's gross profit and other fundamental indicators for more details.
Cal Maine Volatility Drivers
Cal Maine unsystematic risk is unique to Cal Maine Foods and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Cal Maine you can also buy Lamb Weston Holdings. You can also mitigate this risk by investing in the consumer staples sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Cal Maine important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Cal Maine income statement and balance sheet. Here are more details about Cal volatility.Click cells to compare fundamentals
An Additional Perspective On Cal Maine Foods
The recent roll up in Cal Maine short term price appreciation could raise concerns from investors as the firm is trading at a share price of 74.84 on very low momentum in volume. The company executives have successfully maneuvered the firm at convenient times to take advantage of all market conditions in September. The stock standard deviation of daily returns for 90 days investing horizon is currently 1.35. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.In the world of investing, patience is often the key to unlocking hidden potential. Cal-Maine Foods, trading on NASDAQ, may just be the hidden gem your portfolio needs. With a current ratio of 3.38X, the company shows a strong ability to cover its short-term liabilities, reflecting financial stability. Despite a modest five-year return of 2.87%, its beta of -0.11 suggests that the stock is less volatile compared to the market, offering a safer bet in turbulent times. Additionally, the impressive operating cash flow of $454.4 million indicates robust operational efficiency, making Cal-Maine Foods a compelling candidate for investors seeking steady growth and stability..
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