jepittman

Sysco: Reasonable Price for a Dominant Company

And they will eat cold soup at home only so long. Friends and family becon at yon restaurant and we will go.


On Mar 25 08:52 PM REBEL wrote:

> Hey Chris B - Yes, the world economy could implode and make all stocks
> worthless. But people will eat 'til the end of time.

Marc Faber: 'It Will All End in Disaster'

Good old Marc. Buy but just remember its all going to hell later. You need me to tell you when. Just subscribe to my newsletter.

Bank Stocks Will Return to Prior Norms

Its still not too late sonny.


On Mar 24 11:06 AM Alex Filonov wrote:

> Jason, I have to congratulate you on BAC position. I was wrong and
> you were right. It's no small deal to get a double in less than a
> month.

Sysco: Reasonable Price for a Dominant Company

Discounts depend on volume. Greater volume to a restaurant reduces per unit supply costs. Its really a logistics game with several moving parts. According to a friend who works at one of Sysco's supply warehouses business is pretty flat but he also says restaurant traffic picks up almost immediately when the economy improves. Some call this an 'early cycle' business because it is so sensitive to economic changes.

Sysco is a good business for long term conservative equity investors. Volatility is lower than the market, it pays a consistent and growing dividend, earns a high return on equity capital (routinely around 30% according to Value Line), and dominates the markets it serves. The next time you eat at your favorite restaurant look around for what I call 'Sysco signs'. It may be a private lable box in or near the kitchen, the name on the individual sweetner packets on the table or the coffee supplies near the coffee maker. If it is an individually owned restaurant chances are they are supplied by Sysco.

Incidently Barrons Online (subscriber site) has a good writeup today that compliments the above article. One other thing pointed out in that article is Sysco's large business with schools, hospitals, military installations, nursing homes and cruise ship lines.

Buffett Closes Derivatives Contracts, Goes Back to Writing Insurance

Its a good time to beat up on a buy-and-hold investor by traders. Rare opportunity in fact. Kass is a smart guy who knows a good thing when he sees it.

Interestingly Kass (a notorious short seller who obviously has done well) is now quite bullish. And not for a trade.

Selling Sysco

Sysco is a consistent performer in a chaotic market. The return on equity is routinely in the 30% range with a growing dividend. The company has a simple business plan that is executed relentlessly by a management that are themselves heavily invested in the business and is of high character (not something to scoff at in this world of Enron, Worldcom, Citigroup, etc.). Sysco has been the victim of a steady PE erosion over the last several years despite a rising earnings and dividend stream. I do not believe this is a company specific phenomenon. Wal Mart, Pepsi, and many others have suffered similar or worse fates.

It appears the author is a trader rather than an investor, as so many are these days. Nothing wrong with that. However as someone above has said, for a trader there is not a lot here to get excited about. Low beta, boring business, steady price decline, etc. For an investor however there are a few things to like. Low beta, boring business, increasing valuation (lower prices and higher earnings and dividends), trustable management, consistent dependable revenue streams not generated by 20 to 1 leverage. One other thing. Sysco flys below most radar screens and is rarely mentioned in the financial media. A very good thing these days.

Disclosure: Long Sysco for many years.

Not Everyone Is Afraid

nevertheless they are there.


On Mar 01 09:44 PM bigmoney wrote:

> >> Red Lobster jammed full ALL DAY today with obese people waiting
> for overpriced undersized portions. Just a last hurrah before their
> credit cards get shut off?
>
> I seem to recall that Red Lobster offers all you can eat (greasy)
> cheese bread. A large person could easily put away 3000 calories
> of cheese bread alone. The undersized lobster tail is just cover.
>

Buffett Takes Advantage of the Wall Street Addicts

Bravo. Jason is wise beyond his years.

Nobel Laureate Penzias: U.S. Needs a $1 a Gallon Gas Tax

I see the logic for a gas tax but not now. This economy needs lower energy prices to cushion the economic decline. The public is getting some real relief at the gas pump and that relief is mostly being spent. Restaurants are still busy and Wal Mart and other discount stores are doing brisk business. People have money left over for small convenience store purchases. Hike gas a dollar a gallon and a lot of that will disappear.

5 Indicators the Economy Is Recovering

You are correct but these forums are full of them. It is just a reflection of what the media and markets are feeding everyone.


On Feb 25 10:00 AM Abraxas wrote:

> This is not the forum for these types of comments!

Reports of Economy's Demise Are Greatly Exaggerated

The charts reflect current conditions which are seen from many points of view. Sometimes it helps to see facts instead of subjective fear/gloom people are subjected to in the media.

As for Kudlow, I would suggest the time to be wary of him was six months ago when he was popular. Since the gloom is so widespread it might be more opportunistic to lean the other way now.

America has suffered from high unemployment, high debt, and inflation before and emerged prosperous. IMO we will deal with these problems successfully again if and when they arise. This is not a popular opinion right now as most people expect America's standing in the world to collapse. They will be proven wrong. America's institutions and dynamic, resilient economy will again be the global economic engine it has been in the past. Our markets and economy will recover, possibly sooner than most expect.


On Feb 25 07:06 AM atlasman wrote:

> Sounds like you are channeling Kudlow. The problem is all of these
> indicators are backward looking and do not mix in future unemployment,
> inflation, and massive public debt.

Tar Sands: How Much Is Out There and Can Nuclear Help?

According to Stratfor Canada is interested in applying our 'clean coal' technology to the tar sands development. This will require some coordination between the two countries regarding international carbon emission regulations(Kyoto accords) but it appears this was on the agenda at the recent meetings between President Obama and Prime Minister Harper. With Chavez of Venezuala looking more like a new version of Fidel Castro, and Mexico's declining production profile, Canada's tar sands look like the logical replacement for unreliable energy from South America.

Did Geithner Undersell His Plan?

I agree Geithner did a wretched job selling his plan. It also appears this administration cares not a whit about where bank stocks trade. Bank owners are not their constituents. Otherwise they would have been far more sensitive to the nationalization rumors. Regardless, they have this congressional term to get the economy moving ahead solidly before they again face the voters. I continue to believe they will do whatever it takes to do so.

Abercrombie's 2009 Strategy Yields Favorable Results

So does virtually everyone. You are solidly within the consensus, and you could be correct. However outsized returns are obtained by recognizing where the consensus could be mistaken and positioning accordingly. The author is suggesting this stock could be such a situation. Time will tell.


On Feb 17 02:04 PM Joe Friday wrote:

> I think that one should be careful in giving Abercrombie too much
> credit.
> Their strategy of holding pricing has resulted in significant same
> store sales declines last quarter (25%).
> Even more ominous is their inventory build. In the fourth quarter
> last year they did 1.228M in sales and ended the quarter with 333M
> in inventory (24 days of sales).
> In the fourth quarter just ended they did 997M in sales and ended
> the q with 373M in inventory (34 days).
> As their CEO likes to portray them, they are an "aspirational" brand.
> I would avoid any company with that approach in this market environment.

Cheesecake Factory: Why Piper Jaffray's Downgrade Was Baseless

Wachovia securities research has some proprietary data that measures the average minutes wait for a table on friday night, the peak night for casual dining. CAKE is one of several restaurant chains measured and the data shows a slight increase in the minutes wait this year vs last year. While this does not indicate how earnings will play out it, it is a large enough sampling to indicate demand is still fairly robust. While things can still get worse, the share price appears to have already discounted a lot. Allowance for even a mild recovery out a few months looks nonexistent.

No position in CAKE, long SYY (foodservice wholesaler)