Cal-Maine (NASDAQ:CALM) is the largest egg producer and seller in the United States. While the egg market is mature, there are areas of compelling growth, and Cal-Maine has been successful in shifting a good chunk of its sales to higher margin, in-demand products. From an industry-wide point of view, things look to be improving as well; for instance, feed costs have come down slightly from their near-record highs of 2012 and 2013. Cal-Maine continues to make bolt-on acquisitions to increase its market share and streamline operations to lower costs in the long run. Here's why Cal-Maine remains a compelling business to own for 2014 and beyond.

Puns aside, Cal-Maine is raking it in from shelling out eggs across the country. Net sales grew 10% in the fiscal third quarter to just under $400 million, driven by increasing demand in the the specialty egg segment. Nutritionally enhanced, organic, and free-range eggs are higher-margin goods and growing sales at a brisk pace. Specialty egg sales were up 9% in the quarter, and now account for 17.4% of the dozen-egg mix and 23.7% of total shells sold.

Cal-Maine's bottom line hit $1.77 per share in the third quarter, up markedly from $1.27 per share in the year-ago quarter. In addition to the specialty-egg margin benefits, the company also benefited from lower input costs. In the quarter, feed costs per dozen eggs was roughly $0.46 -- a large decrease from the prior year's $0.57.

Interestingly, management noted that demand has been similar for both traditional egg products and the company's enhanced offerings.

Looking ahead
In the long run, Cal-Maine offer investors reliable, income-generating growth. The near and medium term fortunes of the egg industry fluctuates with the price of feed costs, but overall consumer demand should remain steady over time. With those variables, investors will see the respective fluctuations in Cal-Maine and peers' stock prices, but investors should remain focused on the company-specific fundamentals. The company has the cash to continue making bolt-on acquisitions, such as the recent Delta Egg Farm purchase. The deal was completed at the beginning of March and further solidified the company's position as the industry behemoth.

While the stock price will likely not soar the way it has in recent times -- up 35% in the last 12 months -- it is a reasonably valued business and well-tuned to grow comfortably in the long run. Cal-Maine pays a $0.59 per share quarterly dividend, a more than 60% hike from previous periods. 

Cal-Maine isn't a bargain stock, nor is it a high-growth machine. But for investors interested in owning stocks that they can buy and hold with infrequent checks, this is a solid bet.

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Michael Lewis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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