Cal-Maine Foods (CALM)

The current short position (14M shares) is at 124% of float (11.4M). This is obviously very high and presumably indicates the existence of naked shorting. History shows that the only instances of successful massive shorting are due to corporate fraud, with ENRON being the poster child.

Assuming there is no corporate fraud, the short positions will eventually be covered, which should cause a massive short squeeze.

The current P/E ratio is at 4.9; Yahoo reports that the average P/E for the industry is 9.6. Even if you assume no future growth in earnings, the stock is underpriced. The ROI is at 70%, which indicates a well-managed, profitable company.

On November 27, 2007 Cal-Maine Foods, Inc. announced that the Company’s Board of Directors has approved the adoption of a variable dividend policy to replace the Company’s present fixed dividend policy. Effective with the third quarter of fiscal 2008, which ends on March 1, 2008, Cal-Maine will pay a dividend to shareholders of its Common Stock and Class A Common Stock on a quarterly basis for each quarter for which the Company reports net income computed in accordance with generally accepted accounting principles in an amount equal to one-third (1/3) of such quarterly income. Dividends shall be paid to shareholders of record as of the sixtieth day following the last day of such quarter and payable on the fifteenth day following the record date. Following a quarter for which the Company does not report net income, the Company shall not pay a dividend for a subsequent profitable quarter until the Company is profitable on a cumulative basis computed from the date of the last quarter for which a dividend was paid.

This type of dividend policy makes CALM shares more attractive to investors.

Egg prices have increased steadily in the past year and demand remains high. Cal-Maine is the country's top egg seller, with over 15% market share.