Looking for an income earning industrial stock to add to your portfolio? I’d recommend taking a good look at Fastenal, a maker of — as the name suggests — fasteners used in construction and manufacturing.

I don’t own Fastenal in my personal portfolio (though a company in which I have a stake has some holdings in a managed investment account). My thesis is that this could be an opportunity to buy the stock on the dip.

Fastenal announced strong earnings growth last week, but concerns about pressure on its profit margins from rising freight costs as well as concern about what impact a trade skirmish with China could have on the company pushed shares down. News reports said the stock fell 7% on the day the company released earnings.

Now, I’ve made the mistake of chasing stocks down before, buying impatiently each time the share price takes a hit. But Fastenal is a story I like: the company posts solid earnings growth, but the stock is punished by jitters about trade and inflation. I’m not downplaying those concerns, but this is a company with growing revenue and profits, a strong balance sheet, and it pays a dividend just about 3%. Last week, shares ended at $52, down from a recent high of about $61.

It’s a name I plan to keep an eye on, especially in a world where many of the larger, mega-cap industrial names seem overbought to me.

 

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