#7 - Sysco (NYSE:SYY)
The foodservice business was one of the hardest-hit sectors during the global pandemic. While some restaurants are open, there are many that remain shut. But for many schools and entertainment venues, 2020 was a complete washout. The Delta variant is causing some jitters, but it appears unlikely that there will be more extreme mitigation measures.
And that’s bullish for a company like Sysco (NYSE: SYY) who is the global leader in selling, marketing, and distributing food products to venues such as these. SYY stock has more than doubled since hitting its pandemic low last March. However, the growth has been more muted in 2021, with the stock up just about 10%.
The consensus opinion of analysts is that the stock has another 9% to go, and that may be too low. In the company’s most recent earnings report, it reported that its free cash flow increased by more than 110% year-over-year and the stock is expected to grow at a compound annual growth rate (CAGR) of 22.9% over the next five years.
About Sysco
Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of various food and related products to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.
Read More - Current Price
- $76.57
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $85.93 (12.2% Upside)
In the introduction to this presentation, I noted that 2021 has been a good year for investors who owned equities. Although many threats remain on the horizon, the worst hasn’t emerged. And that is keeping bullish sentiment in stocks high.
However, it hasn’t always been a smooth ride. Investors have cycled back-and-forth between growth stocks and value stocks. Along the way, there have multiple mini bubbles that have fizzled out. Electric vehicles, biotech, even the FAANG stocks have all corrected at one point.
That’s another reason for investors to seek the diversification that comes from cyclical stocks. Many of these stocks won’t provide aggressive stock price growth, but during volatile bull markets like the kind we continue to experience, the diversity of cyclical stocks can provide stability.
Less risk-tolerant investors can look at exchange-traded funds (ETFs) as a way to help add cyclical stocks to their portfolio. One of the top choices is the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (NYSEARCA:RCD), an “equal weight” fund which means no one position is more than 1.9% of the entire fund’s holdings
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