Thursday, October 23, 2014

Fastenal (FAST) 2014 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 (19% and 40% respectively) while earning a 16-25%+ return on equity.  FAST’s growth is sensitive to economic downturn; however longer term, the company should continue to produce excellent results as a result of:

(1)  expansion of its product line,

(2) installation of a more efficient distribution system,

(3)  effective cost controls,

Negatives:

(1)   revenues are sensitive to economic conditions,

(2) rising raw material and fuel costs.

FAST is rated A+ by Value Line, has no debt and its stock yields 2.2%.

      Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                Yield      Growth Rate     Ratio       Since 2004

FAST         2.2%         13%                59%             10
Ind Ave      1.5            14                   37               NA 

                Debt/                       EPS Down       Net        Value Line
              Equity          ROE      Since 2004      Margin       Rating

FAST         0%             26%           1                14%          A+
Ind Ave     27               31             NA               8             NA
   
       Chart

            Note: FAST stock made good initial progress off its March 2009 low, quickly surpassing the downtrend off its September 2008 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines).  Intermediate term, it is in a trading range (purple lines).  The wiggly red line is the 200 day moving average.  The Aggressive Growth Portfolio owns a 50% in FAST, having Sold Half in early 2012.  The upper boundary of its Buy Value Range is $39; the lower boundary of its Sell Half Range is $67. 




10/14

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