EOT Trade Alert – January 9, 2015
Trade Alert:
Buy FAST February 20th 2015 $48.00 Calls at $0.75 or better
Company Background:
Fastenal Company (FAST) is a wholesale and retail seller of industrial and construction supplies. As their name suggests, many of their products are used to fasten stuff together like bolts, nuts, screws, studs, and washers.
Short-Term Catalyst:
In October, Fastenal reported quarterly earnings jumped 12.5% and revenue growth of 14% beat expectations.
However, weakness in September, the final month of the quarter, sent shares of FAST tumbling to a 52-week low of $39.94. Since then, the stock has surged 15% and it has established a solid uptrend with a series of higher highs and higher lows.
FAST is set to report 4th quarter and full year earnings next week. And more importantly, they will also discuss their forecast for 2015.
I believe the economic conditions are right for FAST to grow faster than currently projected. The steady growth among manufacturing and construction companies is expected to accelerate in 2015.
Based on the recent price action of FAST, I believe it will continue to make higher highs. That means FAST should quickly reach $48.00 per share even before they report earnings… and if management says the right things, it could go as high as $50.00 in short order.
Let’s grab call options on FAST before they report earnings next week.
Trade Details:
| Underlying Stock Symbol: | FAST |
| Current Bid-Ask Price: | $0.60 – $0.65 |
| Option “Buy Up To” Price: | $0.75 |
| Break-Even On Stock At Expiration: | $48.75 |
| Maximum Risk Per Contract: | $75 |
Exit Strategy:
FAST is trading at $46.14 per share. Resistance levels will be at $48.00 and again at $50.00. Remember, we want this stock to move higher. Support levels will be at $45.00 and $44.00. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.
Chart:
Category: EOT Trade Alert
