SYSCO Corp (SYY)

Solid company with good dividend. Long term buy.

One of those company's that you will never know you use. Unless you work in the resturant industry. When I did, I never had a problem with Sysco. There employees are very profesional. A lot of there drivers belive that if they are not 15 minutes early they are late.

Nice blue chip on the value side that pays a good divident.

As reported in Fool.com, Sysco is the outright leader in its industry as a food supplier to everything from small to large kitchens.

As the economy tries to pinch pennies out of restaurants, cafeterias, and delis, Sysco's portfolio of low to high end food brands will help meet the need.

Low P/E, above average, and growing, dividend and wide moat rating due to its dominance in the food service area makes this an extremently attractive investment.

Sysco is an amazingly run company which is by far the market leader in a highly fragmented market(there is no company close to it and they only have roughly 17% market share) with strong competitive advantages. The company earns spectacular returns on capital with a highly scalable operating structure, leading to the ability to profitably grow for some time. I hope to see them opportunisticly use the billion or so dollars they have to continue their acquisition of smaller companies which has historically earned high returns. The 2 concerns which I would potentially have would be 1) a general reduction in eating outside the home, 2) increasing number of chain restraunts as a percentage of total restraunts.

1) There has been an overall longterm trend over time toward more dollars going toward eating out of the house. From 1972 to 1998 the share of dollars going to food away from home increased from 37% to 50% and hadn't materially changed until 2008 when it declined to 48%. If this is the beginning of a longterm trend there wouldn't be a huge immediate impact on Sysco as their revenue would decline as a percentage of food sold. The greatest impact would be on Sysco's customer's, small restraunts, whose profits would decrease rapidly and could lead to a number of companies going out of business. This would be a hit to longterm sales and receivables.

2) A switch to a larger percentage of chain restraunts would lead to lesser profitability. Sysco serves these customers through their SYGMA segment, which has been a drain on profitability as these customers have much greater bargaining power resulting in much lower margins(losses in some years). I don't consider a change such as this to be horrible as further consolidation of distributors may allow for greater pricing power and at worst it only shrinks the available (profitable) market.

These risks are being priced into the stock far beyond what is warranted(the risk talked about far more is the risk of consumers eating in home). The company has taken steps to help improve performance(by reducing invested capital and slightly reducing cap.ex.) and reduce risk(decreased accounts recaivable as a percentage of sales) which should help through the lean times. Even though this company won't trounce the market (don't expect more than a double unless you plan on holding for a considerable time) it should outperform the market over time.

Low P/E, good dividend

http://www.thediv-net.com/2009/09/sysco-in-buy-zone.html

one of the only stocks not moving as the market rallies. So the market believes more in housing than it does in restaurants? They have $1 b in cash, $1 b in free cash flow/year, paid a dividend for 38 years, and by many reports continue to gain market share and set it sights on acquisitions in this trying market. A payout ratio of 52% and a yield of 3.7%, the dividend looks to be very safe for many years. They also have an extremely successful network of distribution centers making them a large moat, dominant company in their field. A TMF favorite pick, it looks like great portfolio balance to energy and commodities for the next 5 years. When many are still expecting a market correction, the dividend could even make this stock a 'safe haven' pick in any outcome.

Improved supply chain managment

Market leader in its segment, will rebound with the market in the second half of '09.

Good business that wil grow with improvement in economy, perhaps with increased margins, as well as commodity prices decline.

good stable winner

Motel Dividend pick 37 years

100

solid company, good dividend, reasonable price

The stock price is low from its average because of the economic environment. This can be seen by looking at its full chart history. The company has a history of growing earnings.

Even though we all buckled down for the recession, we have to eat, and when the economy gets back into it's comfort zone, fat america will have the financial confidence to over-eat once again!

The leader in food product distribution to just about everyone in the industry. Once the economy is on a steady rebound these guys will go nowhere but up.