Fastenal (FAST) Falls Further As It's Water-Logged And Getting Wetter

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 ( 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 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 $86.5 million.
  • FAST has traded 1.6 million shares today.
  • FAST traded in a range 219.6% of the normal price range with a price range of $1.51.
  • FAST traded below its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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.

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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 2.2%. FAST has a PE ratio of 28.4. Currently there are 4 analysts that rate Fastenal a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Fastenal has been 1.8 million shares per day over the past 30 days. Fastenal has a market cap of $13.2 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.05 and a short float of 12.2% with 14.86 days to cover. Shares are down 6.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Fastenal 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, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.4%. Since the same quarter one year prior, revenues rose by 12.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FAST's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FAST has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • FASTENAL CO has improved earnings per share by 7.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($1.67 versus $1.51).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Trading Companies & Distributors industry average. The net income increased by 7.8% when compared to the same quarter one year prior, going from $121.01 million to $130.51 million.
  • Net operating cash flow has increased to $79.63 million or 48.50% when compared to the same quarter last year. In addition, FASTENAL CO has also vastly surpassed the industry average cash flow growth rate of -5.87%.

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