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Dykstra's Deep-in-the-Money Call: Sysco

Lenny Dykstra

I hope to keep the momentum going with today's pick, which is Sysco(SYY Quote). The company distributes food, including meats, fruits, vegetables, desserts, and fully prepared meals as well as canned and dry foods. It also supplied products such as disposable plates and cups and tableware. Sysco operates in one of the most basic of industries; the distribution of food and related products and services to restaurants, nursing homes, hospitals, hotels, motels, schools, colleges, cruise ships, sports parks and summer camps - wherever a meal is prepared away from home.

The company is impressive in many areas. Its profits have risen for seven quarters in a row. It is gaining market share and has had a consistent return on equity (ROE) of 25% or more for the last several years.

In its most recent earnings announcement at the end of April, the company beat Wall Street's expectations. Despite slow sales at its restaurants and rising food costs, the company showed net income of $240.9 million, or 40 cents a share. That's up from $221 million, or 35 cents a share in the year-ago period. Analysts, on average, were calling for 39 cents a share.

The stock is trading midway between its highest and lowest point in the last year. Yesterday it shed 44 cents, or 1.41% to close at $30.81. Its 52-week high is $35.90 and the low is $26.45

This is a solid pick that we can feel comfortable with. For that reason, I am placing a limit order to buy 10 January $25 calls (ZHKAE), paying $6.50 or better. Don't forget to place your GTC sell order $1.00 higher than the fill price so you can cash in on your $1,000 victory. In other words, if your order is filled at $6.50, you should immediately place a good-till-cancel (GTC) order to sell at $7.50. Cha-Ching!

Always remember: Life is a journey, enjoy the ride!

Know What You Own: CAL operates in the wholesale food industry, and some of the other stocks in its field include Performance Food Group(PFGC Quote), Kraft Foods(KFT Quote), ConAgra Foods(CAG Quote) and Sara Lee(SLE Quote). These stocks closed at $34.03, $31.53, $23.00 and $13.76 respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.