Betting on a Low-Profile Food Service Giant

This week’s Alpha Algorithm flagged a stock that has flown far below most investors’ radar screens. Although you may not have ever heard of it, Sysco Corporation (SYY) boasts three times the market capitalization of higher-profile Whole Foods Markets (WFM), which is broadly in the same sector. Sysco’s stock has only recently broken away from the broader market and offers the prospect of solid gains in the months ahead.

Founded in 1969 and headquartered in Houston, Texas, Sysco Corporation (SYY) distributes a line of frozen foods, paper products, cookware and restaurant and kitchen equipment. It serves restaurants, hospitals, schools, colleges and other food service customers. Sysco operates 197 distribution facilities in the United States, Bahamas, Canada and Ireland.

Sysco Corporation (SYY) versus the S&P 500 Year to Date

Six Top Investment Strategies Betting on Sysco Corporation (SYY)

1. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

2. Dividend Aristocrat

The stock is among those in the S&P 500 that have increased dividends for at least 25 consecutive years.

3. High and Steady Dividend

The stock is one of 50 dividend-paying companies from the S&P 1,500 Composite Index that has increased dividends for at least 20 consecutive years.

4. Insider and Analyst Sentiment

It is one of 100 top stocks out of 5,000 U.S stocks where corporate insiders (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) is buying the stock and Wall Street analysts have recently increased earnings estimates.

5. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

6. Float and Leverage Shrink

This stock is expected to outperform the benchmark Russell 3000 based on its decreasing number of outstanding shares, increasing free cash flow and shrinking leverage.

Recommendation

Buy Sysco Corporation (SYY) at market today. Place your initial stop at $48.50.

I am holding off on recommending options at this time.

Portfolio Update

Several of your positions are now oversold, and ripe for call option purchases.

At the same time, because August and September are seasonally among the toughest months of the year, I am going to hold off on recommending any new options at this time.

Sincerely,

Nicholas A. Vardy