Sell Sysco (SYY) at the Market

It is now time to recommend that Sysco (SYY) be sold at the market. The stock has underperformed since the research recommendation was issued on December 17, 2008. It is highly recommended that anyone who bought the stock based on my research should re-read the posting. It is hoped that the stock was researched and purchased well below the initiation price.

SYY has formed an upside down head and shoulders pattern which could indicate that the stock is headed much higher. SYY is the ultimate hedge against inflation and it may go as high as my first target price of $27.58. In the pursuit of "seeking fair profits" the returns that this stock has provided within the last 253 days say that it is necessary to consider alternative opportunities.

SYY was recommended when it was trading at $23.60. As of August 26, 2009, SYY was quoted at $25.34. This equals a compounded return of 10.85% in a little over 8 months. Conservatively, on an annualized basis this would equal approximately 15.65% return. Selling this stock now also generates a return 2.59x greater than the amount of the dividend yield if the stock was held for a whole year.

As I have indicated in the purposes and function of this site, the goal is to:

  • maximize the annual yield of each trade.
  • reduce time between buying and selling of each stock.
  • exceed the annual yield of government guaranteed alternatives in each trade.

Research recommendations are intended to be a starting point for investigating a quality company at a reasonable price. It is hoped that after doing the background research you can buy the stock at a lower price. Ideally the stock should be held in a tax deferred account and should not consist of less than 20% of your holdings. Personally, I prefer holding only 2-3 stocks at a time.

Sell recommendations are intended to deal with the short term reality of the market. The tracking of the Sell recommendations are the worst case scenario if you happen to have bought a stock at the time the research recommendation was made (please avoid making this mistake.) I aim for mediocrity in my returns, therefore I am happy with 9-12% annual gains. However, since codifying my approach to investing in 2005, I have had annual returns of 14% and above every year since.

It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

Please revisit Dividend Inc. for editing and revisions to this post.

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