Sometimes you have all the pieces  of a successful business making clothes, cars or skyscrapers — and you just need something to snap them all together. That’s where Fastenal (NASDAQ:FAST), one of the best midcap industrial wholesalers in the country, comes in.  Fastenal is one the largest distributors of fasteners, repair products and adhesives in the nation.

Fastenal stock is up 4.5% so far in October as of the opening bell today. The company sells over 410,000 types of fasteners and 586,000 other general maintenance, repair, and operational items in over 2,400 locations, the majority of which are located in the United States and Mexico.

Click to EnlargeFastenal operates within a highly competitive arena, with many producers vying for a piece of the $150 billion per year market. The market is fragmented to such a great degree that only 30% is controlled by the top 50 companies, which would suggest that Fastenal has little room to expand its thin profit margins amid stiff competition.

Looking through Fastenal’s catalog, you can see that the majority of sales come from items in the 10 cent to $1 price range, simple items like screws and cable ties. There are a few specialty items priced around $4 — but the low prices mean low profit margins.

With so many large competitors like Home Depot (NYSE:HD) to contend with, Fastenal has carved out a niche by building its business model around three ideas: Make the largest array of all types of fasteners, limit store size and outsource production.

Providing a specially tailored selection of items allowed FAST managers to capture a clientele of defense contractors, large manufacturers and government agencies to supplement business from construction workers and handymen. Fastenal’s highly efficient supply chain allows it to make and provide equipment to its customers faster and more conveniently than competitors. While Home Depot and Lowes (NYSE:LOW) may have large product selections in general, fasteners and nails and bolts are just a small sector of their business.

These decisions have allowed FAST to create a business model that can thrive in small to midsize markets. The stores in small third-tier locations can be successful on $80,000 of sales per month, much lower than almost all of their large competitors. This allows the company to operate stores that appear to be traditional and convenient mom and pop hardware stores, but have a tremendous selection and competitive prices due to their national scale. In high density urban areas, this helps Fastenal shine.

Manufacturers say that they like working with Fastenal because it gives them an ability to bypass the inherent financial and operational difficulties of connecting their products directly and efficiently with their customers. This allows Fastenal the luxury to focus on selling the product and establishing alliances with top-tier channels of distribution.

The company employs a sophisticated logistics system that tracks customer demand at all locations and uses this to send daily shipments to branches before it is requested On top of this FAST has recently employed vending machines with various fasteners in locations that cannot handle a full store.

Morningstar analysts recently called Fastenal’s finances “impeccable” as it generated $2.2 billion in revenues and in the first two quarters of 2011 has already secured $1.34 billion, 50% of which can be attributed to their fasteners. FAST has $76 million of working capital, and no debt.. This has allowed them to average a 15% return on invested capital since 2001, which is excellent.

However, there are risks associated with a business so dependent on U.S. economic growth. Morningstar analysts also worry that Fastenal is prone to cannibalization as stores begin to compete with one another and vending machines take significant business from their brick and mortar establishments.

Shares have kicked their competition all over the lot, as you can see in the chart above. Needless to say, for this month at least, FAST is a good buy, as there is no sign that anything can, well, hold it down.