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America's Next Top Model (Corporation)

It may seem borderline insane and irresponsible for any analyst to make a buy recommendation in the current environment, which is brutal by any historical comparison.

But I put it to you that it is more insane and irresponsible to make a buy recommendation when the Dow Jones is trading at 14,000 than it is when in the low 9,000s.

Fastenal (FAST - Get Report), the largest U.S. distributor of fasteners, is a beacon of light in a barren corporate landscape where CEOs and management teams have failed investors repeatedly. Fastenal, founded in Winona, Minn., is the way U.S. corporations should be run.

Our model gives Fastenal an "A" rating, which corresponds to a "Buy." I must stress, however, that I am only suggesting that investors keep this stock in mind until they think a bottom in the market is achieved or the company's price falls to levels that represent a good entry point to execute a long-term buy-and-hold strategy.

Fastenal has a very strong balance sheet, as evidenced by its incredibly low leverage ratio, where total liabilities as a percentage of total assets is only 13%. This company has used only 13 cents of liabilities (which includes debt) to fund every dollar of assets totaling $1.16 billion. Debt in this environment is a clear risk factor, and Fastenal has very little of it.

The most outstanding aspect is that Fastenal's management team has virtually funded all of its assets through profit retention. Eighty-five cents of every dollar of assets is funded by retained profits; i.e., profit it has earned and kept. This means it has effectively raised 2 cents per dollar of assets from the equity markets and 13 cents from the credit markets.

In other words, the company is funding itself. It doesn't need the credit or equity markets to fund its operations. This is unheard of in a modern context. Fastenal doesn't need a government bailout to free up the credit markets so it can borrow to continue to operate -- it virtually feeds itself.

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