Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Fastenal Company ( FAST) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Fastenal Company as such a stock due to the following factors:
- FAST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $123.9 million.
- FAST has traded 1.9 million shares today.
- FAST traded in a range 216.9% of the normal price range with a price range of $2.39.
- FAST traded below its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower. EXCLUSIVE OFFER: Get the inside scoop on opportunities in FAST with the Ticky from Trade-Ideas. See the FREE profile for FAST NOW at Trade-Ideas More details on FAST: Fastenal Company, together with its subsidiaries, operates as a wholesaler and retailer of industrial and construction supplies in the United States, Canada, and internationally. The company offers fasteners and other industrial and construction supplies under the Fastenal name. The stock currently has a dividend yield of 2%. FAST has a PE ratio of 33.4. Currently there are 3 analysts that rate Fastenal Company a buy, 1 analyst rates it a sell, and 6 rate it a hold. The average volume for Fastenal Company has been 2.6 million shares per day over the past 30 days. Fastenal has a market cap of $15.1 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.98 and a short float of 13.1% with 13.12 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Thursday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Fastenal Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- FAST's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- FAST has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, FAST has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
- FASTENAL CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FASTENAL CO increased its bottom line by earning $1.51 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.51).
- The gross profit margin for FASTENAL CO is rather high; currently it is at 52.61%. Regardless of FAST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FAST's net profit margin of 12.19% compares favorably to the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Trading Companies & Distributors industry average. The net income increased by 0.5% when compared to the same quarter one year prior, going from $98.72 million to $99.23 million.
- You can view the full Fastenal Company Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.