Sysco (SYY): Trading at a bargain price

By Timothy Lutts, Chiel Investment Strategist and Editor of Cabot Stock of the Month Report

From Cabot Wealth Advisory 7/6/10 Sign up for free Cabot Wealth Advisory e-newsletter

We got a nice rally today, but one swallow does not make a summer (Aristotle) and one up day doesn’t make a bull market. But the rotten sentiment levels—which may have reached a nadir last week—mean there are plenty of stocks trading at bargain prices out there.

One worth investing in is Sysco (SYY) the leading distributor of food and related stuff to restaurants, hospitals, hotels and schools.

It’s a favorite of Roy Ward, editor of Cabot Benjamin Graham Value Letter, who recently added it to his Wise Owl Portfolio and wrote this:

“SYY shares sell at only 15.0 times forward EPS with a dividend yield of 3.2%. Sysco is a top-notch company in an industry with excellent growth prospects. We expect SYY shares to advance to our Minimum Sell Price of 39.97 within one to two years.

Sysco has 186 distribution facilities in the U.S., Canada and Ireland. The company focuses on prompt and accurate deliveries and on additional services such as inventory control assistance and menu-planning advice. The company stays ahead of the competition by offering a wide array of fresh, frozen and canned food products. The company also offers a broad range of culinary equipment and supplies.

Sysco is building regional distribution super-centers to buy in larger quantities to achieve lower prices and better serve its customers. Sysco reported sales and earnings increases of 2% and 10% for the quarter ended 3/31/10. Sales to restaurants picked up for the first time since the third quarter of 2008. We expect the increase to accelerate during the next several quarters. We anticipate sales will increase 5% and earnings will rise 10% during the next 12-month period.”

Roy’s Maximum buy price is 31.02, and the stock is now trading under 29, meaning it’s a great buy for the investor who can buy and hold for a year or so as it climbs to Roy’s Minimum Sell Price of 39.97. For more details, click here: Cabot Benjamin Graham Value letter.

Tim LuttsTimothy Lutts

President, Chief Investment Strategist, Editor of Cabot Stock of the Month

Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.