SYSCO Corp (SYY)

Value1000 (89.18) Submitted: 3/20/2009 3:19:07 PM : Start Price: $25.85 SYY Score: +18.54

The distribution business is all about size and scale. Sysco is the undisputed top dog in the industry. The company is investing in things that make it more efficient (i.e. better software, new warehouses, and trucks). This move will allow the company to defend margins. The firm's nearest rival (U.S. Foodservices) cannot afford to make these moves because it was taken out in an LBO and must use every extra penny to repay debt. Even in a protracted downturn this company should be better insulated that its rivals since restaurants only compose 60% of the company's revenues. The rest of the sales come from customers with more reliable demand picture. This environment should allow the company to make some tuck-in acquisitions. Sysco should have little trouble financing a deal since it has repeatedly accessed the capital markets at attractive rate during the past 2 years.