Don’t Count Out Industrial Plays Amid Today’s Tech Boom

Fasteners

The market still loves tech plays, whether AI or not. However, the rest of the economy still continues to show signs of booming. That means that other sectors can also perform well. And they may even be better performers this year.

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  • Recent data shows that inflation is moderate, and the jobs market remains strong. That bodes well for areas such as construction and other signs of a physical booming economy.

    That includes industrial goods. And that could mean a good year for an industrial distributor such as Fastenal (FAST).

    The company just missed on its most recent earnings report, but shares managed to eke out a gain anyway. Over the past year, Fastenal has managed to grow earnings by 0.9% and revenues by 3.5%.

    Fastenal is an industry leader, and while a bit pricey at nearly 30 times earnings, has a 15% profit margin, a high level for an industrial play.

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  • Action to take: Investors may like shares here. Fastenal currently pays a 2.3% yield, but has a long history of dividend growth. The company is also an ideal candidate to buy during a market pullback.

    For traders, the June $85 calls, last trading for about $1.25, could see mid-to-high double-digit returns over the coming months. Shares have pulled back from last year’s highs, but appear to be trending higher now.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

  • Special: Every Time the Government Releases Jobs Data... Make This Trade the Night Before!