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VITL - A Compelling Pair Trade: Long Cal-Maine Foods/ Short Vital Farms
Vital Farms Inc.
2024-05-20 16:10:31 ET
Summary
I'm recommending Long Cal-Maine Foods, Inc. at $58.18 and short Vital Farms, Inc. at $37.64.
Vital Farms' valuation at over 20X EV/FY 2024 Adj. EBITDA compared to 6X EV/ FY 2024 Adj. EBITDA for Cal-Maine Foods is excessive.
Limited barriers to entry for Vital Farms and significant insider selling ($10 million, cumulatively, since last week) raise concerns about its future prospects.
Today, I write to share a compelling pair trade idea:
Long Cal-Maine Foods, Inc. ( CALM ) (currently trading around $58 per share)
Short Vital Farms, Inc. ( VITL ) (currently trading around $38 per share).