The share price of Fastenal Company (FAST) has increased about 3% since the company announced its acquisition of assets of Av-Tech Industries on Oct 1. Av-Tech Industries is a wholesale distributor of aerospace fasteners, military, commercial and aerospace hardware, electronic components as well as miscellaneous aircraft parts
The latest acquisition will help Fastenal expand its fastener distribution business to the aerospace market, which will eventually drive its top-line growth in the long run.
After struggling for several quarters, Fastenal’s top line rebounded in the first half of 2014. End-market slowdown and the broader economic uncertainty were lowering fastener sales which, in turn, dragged the company’s top line in 2013. In order to accelerate sales growth, Fastenal took the strategic decision to increase sales personnel at the stores, which largely boosted sales this year. Moreover, easy comparisons from a relatively weak 2013 contributed to the sales growth rates in 2014. In fact, revenues from fasteners also recovered slightly in the first half after being sluggish in 2013. Moreover, vending trends improved in both the quarters of 2014 and the construction business is showing signs of improvement as well.
Currently, Fastenal carries a Zacks Rank #3 (Hold). Based in Winona, MN, Fastenal Company has gradually grown from a fastener distributor to a full-line industrial supplier. The company has widened its product offering to include an internal manufacturing division, government sales, Internet sales, metalworking and industrial vending. Fastenal has also built a national accounts team, which is dedicated to serving corporate customers. Its non-fasteners products now constitute close to 60% of its sales.
Investors interested in the same sector could consider stocks like Gibraltar Industries, Inc. (ROCK), The Home Depot, Inc. (HD) and Lowe's Companies Inc. (LOW), all of which have a Zacks Rank #2 (Buy).
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