Fastenal stock analysis: Is a retest of the high likely?
Charts suggest Fastenal could consolidate in the short term
Fastenal reported third-quarter numbers on 12 October that were largely in line with Wall Street expectations. Net sales of $1.55bn were 10% higher than the comparable quarter in 2020 and marginally above the $1.54bn estimated by Refinitiv, reported CNBC.
The US industrial machinery giant’s earnings of 42 cents per share matched analysts’ estimates and were 9.7% higher than the 38 cents per share earned in Q3 2020. The company also announced a dividend of $0.28 per share.
Fastenal’s chief executive, Lars Florness, in a conference call with analysts after the third-quarter results were announced, said the inflation pressure the company and its peers were facing is not just high – “It’s brutally high. The chaos and… the impact, not just from a financial perspective, but from a toll that takes on our human capital, is immense,” said Florness, according to Market Watch.
Michael McGinn, a senior analyst with Wells Fargo, downgraded Fastenal stock from equal-weight to underweight on 8 October with a target price of $45.
According to Yahoo Finance, nine analysts have projected a price target of $52.22 for Fastenal, which is below the current price. Will Fastenal’s stock go up and surprise analysts, or is it time to book profits? What do the charts suggest? Read our FAST stock analysis to find out.
Fastenal share-price technical analysis: weekly chart
Fastenal’s stock price has been in a strong uptrend since bottoming out at $26.64 in March 2020. The 50-week simple moving average (SMA) has been acting as a strong support during declines.
Recently, the stock has again rebounded off the 50-week SMA and risen above the 20-week exponential moving average (EMA). This indicates that the sentiment remains positive and traders continue to view dips as a buying opportunity.
If bulls drive the price above $55, the stock could rise to the all-time high at $56.31. A breakout and close above this resistance will indicate the resumption of the uptrend. The stock could then rise to $60.
The 20-week EMA has flattened out and the relative strength index (RSI) is just above the midpoint, indicating a balance between supply and demand.
If the price turns down from the current level or the overhead resistance, it could drop to $50 and consolidate in a range for a few weeks. A break and close below the 50-week SMA may signal a deeper correction.
Fastenal share-price technical analysis: daily chart
Fastenal’s stock price rebounded off the uptrend line on 6 October. This is the third time the stock has found support at this line. Hence, this becomes an important level for the bulls to defend.
The bears are defending the 50-day SMA on the upside, as seen from the long wick on the 12 October Doji candlestick.
If the stock turns down from the current level but finds support at the 20-day EMA, it will suggest that traders are not waiting for a deeper correction to buy, which will increase the possibility of a break above the 50-day SMA. If that happens, the stock could rise to an all-time high.
Contrary to this assumption, if the price turns down and breaks below the uptrend line, the stock will complete a head-and-shoulders top. This bearish set-up has a target objective of $43.75.
Fastenal stock: Buy or sell at these levels?
Fastenal’s share price analysis shows the stock is facing selling near the 50-day SMA and buying at the uptrend line. This could lead to a few days of range-bound action before the start of the next trending move.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.