Fastenal Co. (FAST) announced a 2 for 1 split back in April of this year. At that time, I wrote that the company was in a business that would suffer when the economy went into a tailspin and I thought it wouldn’t be able to maintain its impressive upward momentum, notes Neil Macneale, editor of Stock Split Newsletter.

I was right that it couldn’t maintain its upward momentum but I was wrong about the cause. As it happened, instead of a recession, the Trump tariffs have been a big drag on FAST and the stock is down 16% since the split was announced on 4/18/19.

So, besides the drop in price, has anything else changed? Of course, because of the decline in price, all the numbers such as PE, price-to-book, dividend, earnings, and returns all look a little better now.

What hasn’t changed is the fact that this company makes and sells stuff we actually need, i.e. nuts and bolts.

While the company probably would see sales slip a bit if the overall economy slows down, FAST is well diversified and not highly leveraged and would be a survivor in almost any economic environment.

The problems presented by the tariffs, while significant because Fastenal sources many of its products from China, should prove to be temporary.

If our governments can’t resolve the trade war reasonably and quickly, we will be experiencing more economic problems than just the difficulties of this one company. I have to be an optimist in this regard.

When the tariffs are reduced or eliminated, more than likely within the next two years, FAST should see an immediate and significant boost in its stock price.

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