"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-- Warren Buffett

Can't argue with that, can you? Despite the recent rally, fear still permeates the economy. It's a real gut check, but that fear is creating opportunities for investors patient and diligent enough to search for the babies thrown out with the bathwater -- an invariable product of crashing markets.

Using our Motley Fool CAPS ranking system's screening tool, I scanned for bargain companies with the following characteristics:

  • Five-star ratings -- the highest our CAPS community offers.
  • Estimates of profitability in the year ahead.
  • Terrible performance over the past 52 weeks. Yes, almost every stock meets this condition, but I'm looking for the bargain opportunities. Not stocks that have simply fallen in price, but stocks that are cheap.

Have a look:


Price Change

Recent Price

Forward P/E Ratio

Activision Blizzard (NASDAQ:ATVI)




Dynamic Materials (NASDAQ:BOOM)




Noble (NYSE:NE)




Schlumberger (NYSE:SLB)




Sysco (NYSE:SYY)




Data from Motley Fool CAPS and Yahoo! Finance.

None of these are necessarily recommendations -- just good starting points for you to dig a little deeper. You can rerun an update of this screen yourself, if you'd like.

A closer look at Sysco
When most people think of Sysco, the restaurant industry comes to mind. This creates nightmares about owning the stock, as conventional wisdom tells us that the fall in consumer spending should create a brutal environment for restaurants.

This is entirely true, and Sysco does indeed do most of its business with restaurants. Have a look:


2008 Revenue



Hospitals and nursing homes


Schools and colleges


Hotels and motels




Source: Company 2008 10-K filing.

With the exception of fast-food cheapies like McDonald's (NYSE:MCD), the restaurant industry isn't a fun place to be these days.

But the danger of Sysco's restaurant concentration and the impact of a drawn-out recession become mostly irrelevant when you consider:

  • It's cheap by nearly any definition. This boring stock cranks out a 4% forward dividend. Shares currently trade at 13.8 times forward earnings, which is roughly half of their average trailing multiple going back nearly two decades. Some might say Sysco's historical multiple seems absurdly high, but it makes sense when you consider …
  • That it's the industry's most dominant player by far. This is exceedingly important in the food distribution business because rivals are essentially selling a commoditized product, so competition is based almost exclusively on price. The easiest way to compete on price is to keep operating costs low. And because Sysco's huge size creates a more efficient distribution network, competition can get priced out. It's not unlike the reason Wal-Mart Stores (NYSE:WMT) can swallow mom-and-pop businesses whole: Size can make you an unbearable force to contend with.  

Consider, for example, what COO Ken Spitler noted on a recent conference call:

Without question, the key to our success in this environment is continuing to improve operational efficiency, and I am pleased with how our operations have responded. For example, for our Broadline companies during the first nine months of 2009 compared to the same period last year, our diesel gallon usage was down 7.5% compared to a mileage decrease of 5.7%; kilowatt-hours were down 8%; cases per trip were up 2%, cases per man-hour have improved 5%; and sales per employee have increased 6%.

It's all about efficiency in this industry, and Sysco can get it done better than anyone else.

That's why Sysco has consistently produced solid results, and it's why our CAPS community goes bananas over this company. As CAPS member StockTradingFool wrote back in April:

What's there NOT to like about SYSCO? It's the top dog in a growing market, it's got a great balance sheet, it's been consistently increasing its dividend (which is currently yielding in excess of 4%), it's dividend payout ratio is less than 50% (meaning that it should be able to sustain the current dividend), and it's PEG ratio is right around 1.0 (meaning it's considered to be fairly priced).

Your turn to chime in
Have your own take on Sysco? More than 135,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate.

For related Foolishness:                                                                        

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Activision Blizzard is a Motley Fool Stock Advisor pick. Sysco and Wal-Mart are Inside Value recommendations. Sysco is also an Income Investor selection. The Fool owns shares of Dynamic Materials, which is also a Motley Fool Hidden Gems recommendation. The Fool has a disclosure policy.