MW As egg prices spike, some see an opportunity that's hard to beat

By Venessa Wong

But at current levels, are egg investments all they're cracked up to be?

"The stock that I invested in is benefitting from the egg shortage," one investor said on TikTok last month. "The forward earnings look good because of this egg shortage."

"Invest in eggs instead of buying them," one viewer commented.

The stock in question was Cal-Maine Foods (CALM), the country's largest producer and distributor of eggs, including those branded under Eggland's Best and Land O' Lakes. Cal-Maine supplies retailers including Walmart $(WMT)$ and Sam's Club.

In the company's most recent quarter ending in November, gross profit increased to 37.3% from 17.4% a year earlier, "primarily driven by an increase in the net average selling price of shell eggs" as a resurgence of bird flu decreased supply while demand increased, according to Cal-Maine's quarterly report. The company did not immediately respond to a request for comment.

As the price of eggs, an iconic affordable protein, resurfaced as a symbol of soaring food costs for financially stretched consumers over the past few months, some spotted an "uneggspected" opportunity. With consumers willing to reach ever deeper into their pockets to buy eggs, the savvy move, they reasoned, is to own the eggs.

Some unscrupulous actors even saw their shot in stealing suddenly valuable eggs - as was the case earlier this month with the theft of 100,000 eggs worth $40,000 from a trailer in Pennsylvania. While food is the most commonly stolen cargo, eggs had little appeal to thieves until this recent price surge. (For what it's worth, cheese is the most looted food.)

For those who aren't prone to larceny, owning a share of the egg industry is a more conventional way to reap some of the outsize profits being generated during the current shortage.

A poster on a Reddit page about value investing recently wrote that Cal-Maine seemed like a "boring but profitable" company, and asked for other people's opinions. One responded that bird flu is "practically the whole reason for the revenue growth and earnings beat in the most recent quarter." They then cautioned: "If bird flu went away tomorrow sales and earnings would plummet as would the stock."

Egg prices are expected to keep rising in 2025

Egg prices - up 36% year over year in December - are already at record levels, and are expected to increase by another 20% this year as bird flu continues to take out millions of hens, reducing the supply of the kitchen staple. The price of a dozen large white eggs by publication time had reached $5.46 at Walmart, and people were reporting prices over $10 at their local grocery stores on social media. The diner chain Waffle House is temporarily charging customers an extra $0.50 per egg due to the spike in costs.

Vivian Tu, the personal-finance influencer known as YourRichBFF, noted in a social-media post that "an omelette is about to become a luxury item."

The losers in this shortage are consumers, as well as growers affected by the bird flu. The epidemic, which began in 2022, has devastated farmers with infected hens, who are required by the U.S. Department of Agriculture to cull the entire flock. More than 150 million birds have been eliminated as a result.

The winners are the companies that own and distribute the eggs, who can command high prices right now. Cal-Maine's business, for instance, includes not only the production of eggs but the grading, packaging, marketing and distribution as well.

"The egg company and its shareholders are making higher profits while Americans shell out more for grocery staples," Democratic lawmakers wrote in a recent letter to President Trump about egg prices, citing Cal-Maine's earnings results. "We urge you to make good on your campaign promise to lower food prices for American families," they added.

The White House didn't immediately respond to a request for comment, but has said previously at a press conference that the Biden administration was to blame for high egg prices.

The farmers who produce the eggs, meanwhile, are seeing mixed impacts. Those whose flocks have avoided infection may have reaped the benefits of the resulting surge in prices. Emily and Cody Martin, who just started an egg farm in Pennsylvania at the end of 2024, told MarketWatch that they produce eggs at a contracted rate that has not changed. They do not own the hens or the eggs, and only grow them for their client for a set rate. Due to the shortage, the company they work with has been offering a bonus if they can produce more eggs than they are contracted for.

Meanwhile, farmers who sell their eggs on the open market - meaning they are not locked in at a predetermined price through a contract - are seeing extremely high prices right now, the Martins added. "The open market is what's really wild right now," Cody Martin said.

Still, the current windfall is not being shared across the board, the Martins noted. They said some farmers they know who are in contracts are not being offered any way to share in the soaring profits the companies they produce for are taking in.

Chances like these are over easy

Becoming an egg farmer isn't a realistic plan for most people: The iron is hot now, so it could be too late to go out, buy chicks and raise them to egg-laying age (a whopping 18 weeks old) while prices remain high.

But buying stock allows investors to share in the profit while never having to deal with a hen or an egg at all. Cal-Maine's stock has almost tripled over the last five years, to $108 from $37. However, Stephens analyst Pooran Sharma told Yahoo Finance that at this price, it may already be too late to get in.

Egg prices can be volatile, and while this high-price environment will remain for the foreseeable future, it won't last forever. As Cal-Maine explained in its annual report: "During times when prices are high, the egg industry has typically geared up to produce more eggs, primarily by increasing the number of layers, which historically has ultimately resulted in an oversupply of eggs, leading to a period of lower prices."

-Venessa Wong

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February 08, 2025 07:00 ET (12:00 GMT)

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