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Fastenal (FAST - Free Report) shares have held up well in the recent market correction. The stock now trades just 5% below its 52-week high.

Growth and Income

Analysts are forecasting that Fastenal will grow its earnings per share 38.4% in 2010, 22.9% in 2011, and 19.5% per year for the next three to five years. Meanwhile, its stock offers investors a dividend yield of 1.5%

The stock has a Zacks #2 Rank. It trades at 31.1x 2010 consensus EPS estimates and 25.3x 2011 consensus EPS estimates.

Business

Fastenal operates as a wholesaler and retailer of industrial and construction supplies. It sells fastener products under two categories: threaded fasteners (nuts, bolts, nuts, screws, and washers) and miscellaneous supplies (paints, various pins and machinery keys, and concrete anchors). The company has over 2,300 stores.

Fastenal's Pathway to Profit initiative was rolled out in April 2007 to alter the growth drivers of its business. The four-point plan includes the following: to continue growing its business at a similar rate with the new outside sales investment model; to grow the sales of our average store to $125,000 per month; to enhance profitability by capturing operating leverage in its stores; and to improve the efficiency of its inventory management system.

First-Quarter Results

The company's efforts are working. On April 13, Fastenal reported results for the first quarter. The company's net sales increased 6.4% to $520.8 million. The company reported earnings of $0.38 per share, compared to the Zacks Consensus Estimate of $0.33.

Estimates

After the company's better-than-expected first-quarter results, analysts boosted their estimates for 2010 and 2011.The Zacks Consensus for 2010 increased 17 cents, or 11.3%, to $1.68, and the 2011 Zacks Consensus increased 21 cents, or 11.4%, to $2.05.

In the last 30 days, the Zacks Consensus for 2010 is up 2 cents and the 2011 Zacks Consensus is up 3 cents.

Balance Sheet

Fastenal's balance sheet looks solid. At the end of Q1, the company had about $203 million in cash and marketable securities and no debt. That translates to $1.37 in cash per share.

Additionally, the company continues to generate a considerable amount of cash. During Q1, FAST generated $79 million of operating cash flow and $71 million in free cash flow.

The Chart

FAST shares are up about 70% since bottoming in July 2009. The stock topped out at $56.65 at the end of the April. In the last six weeks, the stock has sold-off with the rest of the market. However, the stock has been strong in the last week, climbing about 9%.




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