Which Has Been the Country’s Best-Performing Stock Over the Past Twenty Five Years? It’s not Apple…
In fact the company in question is decidedly low-tech. It also resides in the industry hit most hard as a result of the subprime scandal and further devastated by ravages of the recession.
Since the infamous ‘Black Monday’ of October 1987, this company’s share price is up 38,565 percent. Microsoft, by contrast, is up less than 10,000 percent over that same period (otherwise most impressive). Apple shares have gone up by a mere 5,500 percent, though to be fair even in the early 1990’s Apple was struggling for literal survival.
With all of the stock market’s controversies through the years, its glamour and glitter, the company whose stock has registered the greatest percentage of growth represents products that couldn’t be more basic. They likely appear on relatively few Christmas lists.
The company is Fastenal. While not a household name to the general public, Fastenal is revered by those who work or closely follow the world of Wall Street as well as its legion of happy customers and frustrated competitors. Unlike many hot, speculative issues which rapidly burn out as stock market disasters, Fastenal has backed aggressive expansion plans with bold investments in personnel (especially in terms of its sales force), new locations and technologies meant to make its products ever more available for its generally professional customers.
Essentially Fastenal has accurately analyzed the needs of its customers and determined how to best serve them through innovation and investment. The company’s website represents an online catalogue that supports 10,700 pages. A visit to the website begins with an offering of fasteners (no surprise) above quick groupings of many basics including such diverse product lines as Tools & Equipment, Chemicals & Paints, Plumbing, Safety, Packaging, Cutting Tools, Electrical, Janitorial, Welding, Hydraulics, Fleet & Automotive and on and on.
There is even an imposing section titled Fastenal Racing, fully documenting Fastenal’s NASCAR racing team led by driver Carl Edwards. As seems typical of Fastenal, there is a link to NASCAR’s website offering seemingly almost as many official Fastenal Racing products as Fastenal offers its professional customers.
In the company’s desire to make its great breadth and depth of product more directly available to customers, the company has invested in what it terms Automated Fastenal Stores. These are basically vending machines which offer essentials such a fasteners. They can be placed at job sites or near customer locations for the timely convenience of the company’s clientele. Though a considerable investment, the company currently operates nearly 7,500 of these customer favored devices.
Chain Store Guide’s database of Home Center Operators & Hardware Chains indicates that Fastenal began the new century with barely over 800 locations. By the time the subprime mess began to affect the market Fastenal was approaching 2,000 locations. Two years later as the recession was coming into its own and most companies in this industry were cutting expansion projections, the company was nearing 2,200 venues. By the end of 2011 the company was operating through 2,585 locations. This grew to 2,611 at the end of its recently completed first quarter. Hard economic times for the nation, and especially for this industry, seem to have been circumvented by Fastenal’s focused and aggressive management style. Their motto could easily be, ‘You’ve got to invest money to make money’.
During this period, CSG’s database of Home Center Operators & Hardware Chains shows a brilliant financial picture in keeping with the showing of Fastenal’s Wall Street performance. The company came into the new millenniumwith annual sales of just over $600 million. For fiscal 2011, the company recently announced an annual sales figure of $2.77 billion, well more than quadrupling sales in just over an economically challenging decade. This is a fitting example in which a company’s financial performance is correctly mirrored by its stock’s performance on Wall Street.
In speaking to analysts across all industries, we seem to agree that one can generally tell a lot about a company’s success by the detail and clarity of its annual and especially its quarterly financial releases. Even Fastenal’s financials press releases are a paradise for those who can’t get enough when it comes to statistics. In addition to historical quarterly comparisons of store counts and sales we can easily compare store personnel counts and the company’s growth of its heralded vending machine business, which is clearly a hit with customers and a key to the company’s financial growth, a major difference maker against competitors.