Investors May Have Just Found A Good Entry Point In Fastenal

John EadeFastenal CompanyFAST

Eade commented in a research report Tuesday that Fastenal's first-quarter earnings report and its subsequent 10-percent selloff represents an attractive entry point for investors. The seller of industrial and construction supplies has seen its stock move higher after President Donald Trump's election win given the assumption that Fastenal would play a role in Trump's infrastructure projects. While waiting for this catalyst to play out, the analyst is raising his outlook for this year and 2018 due to signs of improvement in the energy sector and the recent "solid" Purchasing Managers' reports.

Dividends, Valuations

Eade further highlighted the company's balance sheet remains "clean" and management is looking to boost the stock's 2.8-percent dividend yield even higher.

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Over the longer term, Eade believes the company could show a track record of mid-single-digit sales growth along with a high single-digit earnings per share growth.

Finally, Fasternal's stock is trading at 22x the analyst's 2018 earnings per share estimate, which is on the low-end of its historic 10-year average range of 20 to 38. The stock is also trading at a price to sales multiple of just 3.3, which falls short of the historical range of 2.7 to 5.3.