Fastenal Riding Higher On Enthusiasm Over Shorter-Cycle Manufacturing

As investors start looking past Covid-19, this is a pretty good time to be leveraged to manufacturing, and Fastenal (FAST) shareholders are benefitting. Industrials have modestly outperformed the S&P over the past three months, and those names more leveraged to short-cycle manufacturing are doing even better, with Fastenal up more than 25% and Parker Hannifin (PH) and Rockwell (ROK) both up around 30%.

Given the rising expectations that have accompanied these stock moves (the Street has gone from expecting a mid-single-digit revenue decline for Fastenal in 2020 to low-to-mid single-digit growth), I’m not sure how much gas is in the tank. I’ve been consistently bullish on short-cycle industrial end-markets as the preferred way to play the post-Covid-19 recovery, but that’s looking more and more like the consensus view now. With valuation providing no safety net here, I’d be careful about pressing my luck, though I fully acknowledge that Fastenal is an incredibly well-run industrial name and still very well-leveraged to a short-cycle recovery in late 2020 and into 2021.

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Fastenal Riding Higher On Enthusiasm Over Shorter-Cycle Manufacturing