Fastenal Co. (FAST) is one of the nation’s largest suppliers and distributors of a wide range of construction and manufacturing products, notes Mike Larson, editor of Safe Money Report.
You name it, Fastenal supplies it — pumps, fasteners, plugs, tape, motors, drills, gloves, hydraulic hoses, fans, ice makers, locks, two-way radios, etc.
It does so via some 3,300 in-market locations in 25 countries. In some cases, the firm maintains vending machines and lockers located on-site at customer factories and other facilities.
In other cases, Fastenal serves customers via off-site branch locations or through its e-commerce platform. But the goal is to provide customers with whatever they want, whenever they need it. That helps eliminate production bottlenecks and downtime, thereby boosting productivity and profits.
Consistent profits despite an inconsistent market. Shorter-term results have swung all over the place in the last year due to COVID-19. That’s because FAST has been a major supplier of safety and personal protective equipment (PPE) — which experienced a huge surge in demand last spring and a big drop this spring.
But if you smooth that out and compare Q2 2021 results to Q2 2019, you see Fastenal delivered a 10% rise in revenue and a 17% increase in earnings.
Profit margins are increasing sequentially this year as well, while construction activity is ramping up nicely. Increased infrastructure spending in 2021 and 2022 will only help future results.
And it pays you to wait for those gains! Fastenal sports has an indicated dividend yield of around 2.0%. That beats the yield on the S&P 500 by 60 basis points. FAST is also breaking out to the upside again on the charts.
