jepittman

Take a Helping of Sysco

This is a good call. Sysco earns around a 30% return on equity capital and is a very consistent performer.

On a recent trip to Key West, Fl. I saw a Sysco truck on Duval St. and stopped to chat with the driver who was making a restaurant delivery. He was very friendly and couldn't say enough good things about his company. He told me his volumns year on year had never decreased and that business was good. I know this is anecdotal but looking at the sale numbers companywide it likely isn't far off the mark.

Unemplyment is rising and a lot of customers are trading down the menu but the recent headwind of high diesel and gasoline prices have reversed. Diesel fuel for their large truck fleet is almost cut in half from the peak (the Key West truck makes its daily run from Miami). Also lower gasoline prices leaves extra money in consumers' budget for an extra meal out once in while.

The author has touched on Sysco's valuation. It is absurdly cheap. A dividend over 4% that will be raised in the future, makes it easy to wait for the recovery. This is an easy to understand business model with no shenanigans and an honest, shareholder friendly management. Employees own a lot of the stock and thrive is the sales oriented culture.

I have been a shareholder in Sysco for many, many years and have watched this stock's valuation get cheaper while sales, earnings, free cash flow, and dividends climb every year. Investors are being offered shares in a very clean, dominant, well run company at what IMO is a ridiculously low price. It will not stay this cheap for long.