Today I want to tell you about Fastenal (FAST), the largest distributor of construction fasteners in the United States. Bear with me if you've followed the housing bust and know that homebuilding companies' shares have lost half their value over the past year, because Fastenal's shares have marched to a different beat. It's been one of the few hardware suppliers that gained strength as housing and construction industry stocks got beat down over the past year.

The Minnesota-based construction supply retailer got its start in fasteners in 1967, but has grown to become a dominant force in the $9 billion industrial and construction supply industries. Its product offerings have grown to include tools, cutting tools, hydraulic and pneumatic products, material handling products, janitorial supplies, electrical supplies, welding supplies, safety supplies and raw metal. Though fasteners of all shapes and sizes make up more than half of its total sales, Fastenal's other product lines complement its 300,000 varieties of specialty screws, anchors, nuts and bolts and help draw retail customers to its sprawling portfolio of hardware supply stores.

With over 1,800 stores in 50 states and a total of 2,100 across the globe, Fastenal has maintained ambitious plans for growth. Over the last decade it has posted a nice 14% growth rate, and the company is now slowing projections for new store growth to 8% annually. But this is only because the company is now focusing on strengthening its sales force, which, according to Morningstar analysts, will increase sales more effectively while requiring less capital reinvestment. Fastenal's stores already dominate rural market positions and can be found in more than twice as many locations as its nearest competitor. And plans to increase the footprint of stores in larger metro areas together with expansions slated for international markets, which currently account for 7% of total revenue, should keep sales growth on par with the stellar results that the company has posted over the last decade.

In 2008 look for the hardware giant to add another 160 new stores to its portfolio, about the same as last year, and remember that the shift to a slower new store growth rate will be compensated with a stronger sales force and solid margin improvement.