Sectors of the economy may be coming apart at the seams, but Fastenal Company (NASDAQ: FAST), distributor of nuts, bolts and all kinds of tools, is holding together nicely. Fastenal reported strong numbers for 2Q 2008. Net sales increased 16% to $604,000. (Hey, I never said this stock would topple Home Depot). More importantly, net earnings increased 26% to $76,000 and diluted EPS increased 25% to $0.51. As part of its "Pathway to Profit Initiative," Fastenal opened 112 new stores in Q1 & Q2, bringing total store locations to over 2100.

Like most other businesses, Fastenal has been hit by both the slowdown in the construction industry and the rapid rise in fuel costs. The company is reorganizing its freight service to take advantage of fuel and cost savings by using its own trucking network rather than external service providers. Additionally, the company established a centralized call center to manage accounts receivable company-wide. As a result, accounts receivable increased 14% at the same time the company reduced its bad debt expense. Fastenal repurchased 200,000 shares with plans to buy back more. The company also declared a quarterly dividend of $0.27 per share. YTD the stock has gained 14% and currently trades around $46. This one is worth a look.

Fastenal Company's (NASDAQ:FAST) reduction of its growth estimates for 2007 from 20.2% to 16.9% may not have been encouraging for some -- analysts at Robert W. Baird maintained a neutral rating but reduced the target price from $46 to $43 -- but Morningstar sees good things for the company.

Morningstar has selected FAST's Will Oberton as the CEO of the Year for 2006, on the basis of the company's financial track record, corporate governance, history of creating shareholder value, and growth potential.

A supplier of manufacturing and construction equipment and supplies, FAST got its start some 40 years ago as a producer of fasteners, and now has about 2,000 stores in North America. It has reported compounded earnings at almost 30% annually since its IPO in 1987, while generating returns on invested capital of more than 20%. And the company's share price has kept pace with its financials, also compounding at about 30%.

Oberton has been aggressive about improving FAST since he became CEO, with programs such as overhauling its stores to increase traffic and sales, to centralizing accounts-receivable collection and bringing more of the company's transportation needs in-house. Some of these initiatives have hurt the company's margins over the past few quarters, which may be why Wall Street soured on Fastenal a bit last year.

Besides FAST's long-term growth potential, Morningstar also picked Oberton for his model corporate stewardship, citing the company's superb financial disclosures, reasonable compensation, and minimal option issues. In short: he's not an overpaid, rock-star CEO.