No, this isn’t another investment primer to add to the thousands already out there. It’s actually about nuts and bolts. Real ones. Billions of them. As well as hundreds of thousands of other types of fasteners, connectors and tools.

One of the hobbies I enjoy with my two sons is working on and restoring vintage automobiles. If you’ve ever “enjoyed” this yourself, you know it’s no secret that you need lots of nuts and bolts, and a myriad of other fasteners and connectors, too.

And even if you have tons of them like I do, there’s a real good chance that the one you need is the one you don’t have. I seem to run into this problem just about every weekend.

[ad#Google Adsense 336×280-IA]Home Depot and Lowe’s have many of the run-of-the-mill fasteners you’re likely to need, but if your project calls for an unusual one, or you’re a commercial contractor looking to buy a five-gallon bucket or a truckload of them, Home Depot and Lowe’s won’t help you.

The place that will is a Fastenal Company (Nasdaq: FAST) store. Fortunately for me, one just opened not too far away from our house. With 2,585 stores located around the country, chances are there’s one near you, too.

Fastenal wholesales and retails construction and industrial supplies, including nuts and bolts. It also sells other fasteners, hydraulic tools, cutting tools, plumbing, electrical supplies, chemicals, paints and janitorial supplies.

The company plans to continue opening new stores this year, with plans to add between 100 and 150 throughout the United States. The company’s stores chalked up revenue of $697.8 million, an increase of 22% year over year for the same quarter. Last quarter’s profits rose 34% to $87.5 million, or $0.30 per share.

While revenue was above estimates, profits were at the low end of the company’s expected range. It attributed vendor incentives and lower freight utilization to the slip in profits.

The company’s CEO, Will Oberton, believes this quarter’s results will be even better than last. “Overall it was a disciplined quarter on margin.”

Oberton believes margins will significantly increase in the coming quarter, and that the vendor incentives and lower freight utilization were seasonal issues.

Investors seem to believe the company, too. The stock recently eclipsed its 52-week high, and closed last week within a few cents of it.

Why would we be recommending a stock like Fastenal that’s up over 77% in just the last year? Two reasons:

  • The first, it’s yet another backdoor indication that the construction industry is slowly recovering, and that’s a proxy for the housing market.
  • Second, with plans to open over 100 new stores in 2012, there’s still plenty of room for growth. Stores become accretive to the bottom line of the company almost from the day they’re opened.

As the U.S. economy slowly recovers, the nuts and bolts of the economic growth will be supplied by Fastenal. It’s the perfect time to consider backing up the truck and adding this “nuts and bolts” growth stock to your portfolio.

Good Investing,

David Fessler

[ad#jack p.s.]

Source: Investment U