Outperforming Fastenal Makes a Perfect Pick for Bulls

There is ample room for upgrades on FAST

Nov 5, 2019 at 11:45 AM
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Distribution specialist Fastenal Company (NASDAQ:FAST) is shaping up as an ideal trade target for a contrarian trader. The stock has rallied 42% in 2019, and recently gapped to near highs thanks to strong quarterly earnings. However, sentiment around the stock is remarkably bearish, meaning there is still plenty of fuel in the tank for this outperformer.


For starters, Fastenal has 12 brokerage firms in coverage, and just one of them recommends buying it. If even just a few of these bears begin to upwardly revise their outlooks, it'll bring more buyers FAST's way.

What's more, short interest is high, with the 40.8 million shares sold short representing 8.5 times the average daily trading volume. This shows plenty of potential for a short-covering rally.

The Schaeffer's Volatility Index (SVI) for Fastenal is 25%, and ranks in the 18th annual percentile -- hinting at low volatility expectations right now. Plus, our recommended call has a leverage ratio of 8.1, and will double in value on an 11.9% increase in FAST stock.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this FAST commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.


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