A couple of days ago, I wrote an article on Vital Farms, and while writing it, I noticed that Cal-Maine Foods’ (CALM) net sales had been steadily declining over the past five years. I know that CALM sells cage-free eggs like Vital Farms (NASDAQ:VITL), so I needed to understand why their revenue decreased.

Cal-Maine Foods is a soft commodities company, and its results depend on highly volatile commodities prices. Its sales depend on shell egg prices, and its variable COGS are correlated with grain prices, specifically corn and soybean. An investor should understand these risks before investing.

The Future Of The Shell Egg Industry

Using information from the United Egg Producers facts & stats website and the U.S. Census Bureau, I forecasted what the Shell Egg industry should look like in 2026. I encourage you to read my article on Vital Foods to better understand how I forecasted the shell egg industry’s future growth.

Figure 1 – Future Of The U.S. Laying Hen Population

Source: United Egg Producers and analyst’s estimates (blue cells)

According to my calculations, I believe the laying hen population should grow at a CAGR of 1.9% during the period. While I was reading Cal-Maine’s 2020 annual report, the company believes that the general demand for eggs will increase on average by 2% a year. In my opinion, their comment makes me more confident in my forecast.

According to my estimates, I believe cage-free eggs will grow at a CAGR of 17.5% from 2019 to 2026. Also, conventional egg production should decrease at a CAGR of 8.5% during the same period.

While reading the company’s 2020 annual report, I learned that specialty egg sales are adversely affected by the decrease in conventional egg prices. It makes sense that at some point, a consumer will pick a

A JD.com Logistics self-driving truck is displayed at China International Fair for Trade in Services in Beijing, China, May 28, 2019. REUTERS/Jason Lee

HONG KONG (Reuters Breakingviews) – JD.com might look slightly unloved after completing its hyped-up spinoffs. The Chinese web retailer’s market cap has more than doubled to $117 billion this year. That has been helped by expectations for listings of its health, financial technology and logistics units which might account for almost half of JD’s equity value. The downside is it prices up a so-so worth for its outperforming e-commerce business.

Shares of New York-listed JD are up 116% in 2020, smashing the gains of the S&P 500 and most Chinese technology peers including e-commerce rival Alibaba. A secondary Hong Kong listing in June helped, as has the company’s Amazon-like pandemic-resilient business. Investors are also pricing in boss Richard Liu’s more exciting ventures in financial technology and healthcare.

JD Digits, the 37%-owned affiliate that specialises in consumer credit and supply-chain financing, has filed to raise 20 billion yuan ($2.9 billion) in Shanghai by selling 10% of its enlarged share capital. Meanwhile, JD recently confirmed plans to list its e-pharmacy in Hong Kong, and is targeting a $20 billion valuation, Refinitiv publication IFR says. JD’s promising logistics arm might be next too. The company has already tapped banks for an up to $10 billion IPO that could value the subsidiary at over $30 billion, Reuters reported in December, citing sources.

JD’s stakes in the three businesses could be worth $53 billion combined, based on the mooted valuations. What’s left, after backing out the group’s $8 billion-plus net cash pile, is JD’s core business. Analysts at HSBC reckon the segment will generate roughly $3 billion in adjusted earnings next year. That implies investors are valuing the rump, JD Retail, at