Everyone Has to Eat: Consider Sysco Corporation (SYY) Stocks and More

It’s an old adage, but it remains true:  everyone has to eat.  And even a simple phrase such as that has some value that can be applied to investing.  Some of the best stocks over long periods of time are those that sell products people can’t easily live without.  Food certainly qualifies as something we can’t do without, and as a result, the following is a list of well-run companies that are worthy of further consideration.

Sysco Corporation (NYSE:SYY) is a food distributor in the United States with an $18 billion market capitalization.  Sysco has sales and service relationships with approximately 400,000 customers and operates from more than 180 locations throughout the United States, Canada and Ireland.  Sysco registered a record $42 billion in sales in fiscal 2012, representing an increase of 7% versus 2011.  In addition, Sysco earned a 15% return on invested capital last year.  Sysco’s solid operating performance is enhanced by its great financial position.  The company has a current ratio of 1.76 times, indicating the company has more than enough current assets to satisfy its short-term liquidity needs.  At the same time, the company holds a modest long-term debt to equity ratio of 57%, meaning that investors shouldn’t be too concerned with the company’s ability to pay its short and long-term bills.  In addition, Sysco is one of the most shareholder-friendly stocks in existence.  In November, Sysco announced it had increased its dividend for the 41^st year in a row.  At recent prices, the stock yields more than 3.5%.  The stock is reasonably priced, with a trailing price-to-earnings ratio of 17 and a forward P/E of 14.

ConAgra Foods, Inc. (NYSE:CAG) has a market value of $13 billion and many household brands, including Healthy Choice, Hebrew National, and Del Monte.  ConAgra Foods’ consumer brands can be found in 97 percent of America’s households, and 28 of them are ranked first or second in their category.  The company increased net sales by 8% in fiscal 2012. The company was founded all the way back in 1919 and has demonstrated a clear intention of rewarding shareholders.  Last year, the company raised the dividend by 4% and yields 3% at recent prices.  Like Sysco, ConAgra trades at a forward P/E of 14.  In addition, ConAgra is conservatively capitalized.  The company has a solid current ratio of 1.7 times. The company has shored up its cash position recently, more than quadrupling the amount of cash on its balance sheet between November and May of 2012.