Although distribution is not typically a high-margin/high-return sort of business, industrial supply is a different story, as MSC Industrial (NYSE:MSM), Fastenal (Nasdaq:FAST), and Grainger (NYSE:GWW) have all managed to generate solid margins, returns on capital, and free cash flow. With the acquisition of Barnes' (NYSE:B)
North American distribution business (BDNA) now complete, MSC
Industrial has an interesting set of options in front of it. While
management will find itself occupied initially with fixing BDNA's flabby
margins, the opportunities for product, end market, and geographical
expansion make this a name worth knowing and owning today.
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