Fastenal

Methodology

Fastenal's industrial distribution business generates highly predictable earnings from recurring sales of fasteners and supplies to manufacturing customers. The vending machine and onsite inventory management model creates sticky customer relationships. Fair value calculations work well when accounting for mid-single-digit earnings growth from market share gains and operational leverage.

Methodology

Fastenal typically trades at PEG ratios between 2.0-3.5x, reflecting premium valuations for its mission-critical distribution model, operational excellence, and customer retention. The company's vending and digital initiatives drive consistent growth through industrial cycles. PEG appears expensive but reflects business quality and predictable compounding characteristics.

Methodology

Fastenal pays a dividend yielding 2-3% with consistent growth, making PEGY moderately more attractive than PEG for this quality industrial distributor. The company balances dividends with reinvestment in vending machines and distribution infrastructure. Total return combines reliable dividend growth with steady earnings compounding from market share capture.