Fastenal (FAST) 2012 Review

Fastenal sells and delivers industrial and construction supplies (threaded fasteners, tools and equipment, cutting tools and abrasives, components and accessories for hydraulics, pneumatics, plumbing and HVAC, material handling products and janitorial, welding, safety and electrical supplies) through both wholesale and retail channels in the US, Singapore, Canada, Mexico, China, the Netherlands and Puerto Rico.  The company has grown its profits and dividends rapidly over the last 10 years (14% and 48% respectively) while earning a 16%+ return on equity.  FAST suffered along with most other companies during the recent economic downturn; however longer term, the company should continue to produce excellent results as a result of:

(1) international expansion,

(2) improving results of its customer base, especially the industrial and construction sectors,

(3)  effective cost controls,

(4) a ramp up in the number of store openings as the economy continues to strengthen--store openings being an important component in FAST’s growth,

(5) stock buyback program.

Negatives:

(1)   rapid store expansion initially raises costs and hurts margins,

(2) rising raw material and fuel costs.

FAST is rated A+ by Value Line, has no debt and its stock yields 1.9%.

      Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2002

FAST         1.9%         15%                49%             10

Ind Ave      1.9            11                    36              NA 

                Debt/                       EPS Down       Net        Value Line

              Equity          ROE      Since 2002      Margin       Rating

FAST         0%             26%           1                14%          A+

Ind Ave     46               23             NA               6             NA

   

     Chart

            Note: FAST stock made great progress off its March 2009 low, quickly surpassing the downtrend off its September 2008 high (red line) and the November 2008 trading high (green line).  Long term the stock is in an uptrend (straight blue lines).  The stock is breaking below the lower boundary of an intermediate term uptrend and will re-set to a trading range.  This is an example of a stock where a trading sale may be appropriate---a stock breaking a primary trend but with little visible support except at much lower levels.  The wiggly blue line is on balance volume.  The Aggressive Growth Portfolio owns a full position in FAST.  The upper boundary of its Buy Value Range is $30; the lower boundary of its Sell Half Range is $59.

http://finance.yahoo.com/q?s=FAST

11/12