If you ever need the basic nuts and bolts for building materials, Fastenal (NASDAQ:FAST) probably has you covered. The company's consistent growth should earn it a place on any Fool's watch list. Today's second-quarter earnings results continued its sterling record, but the stock took a bit of a hit from more short-term-focused investors.

Though not well-known to individual consumers, Fastenal's stores are a necessity for industrial and construction firms such as MasTec (NYSE:MTZ) or Shaw Group (NYSE:SGR). If you're a big player such as Fluor (NYSE:FLR) or Jacobs Engineering (NYSE:JEC), Fastenal will even open a store just for you.

Fastenal's second-quarter sales grew almost 20% year over year, while earnings grew 15%. For the first six months of this year, sales grew at about the same pace, while earnings rose almost 22%. The numbers were strong, but lagged analysts' expectations, primarily due to higher costs. As a result, the stock is down almost 7% today.

Fastenal's performance on a quarterly basis is less important than its longer-term track record, which has been quite strong. Both sales and earnings have grown about 15% each year over the past five years. The average growth is closer to 20% over the past 10 years, and plenty of expansion opportunities still remain. Starting with its first location back in 1967, the company has grown to nearly 1,800 stores, and management believes that it can still double its size in North America before market saturation becomes a concern. Fastenal has only closed 10 stores, ever, which implies that management knows what it's doing.

The one drawback for successful companies in general is that they tend to trade at rich valuations. Fastenal is no exception, priced at more than 30 times trailing earnings. The forward P/E is more reasonable, but still rich in my opinion. In addition, its operating cash flow has been running well below net income during the past two years, primarily because of significant jumps in inventory. This could be due to management's stated goal of improving its working capital, but it's definitely something to watch. In any case, overall free cash flow is low as the company expands, but that's not surprising for a growing firm.

Additionally, Fastenal's customer base is cyclical, subject to the whims of the economy. The company has a strong track record of growth regardless of the economic cycle, but any downturn would likely lower its stock price, giving potential investors an added margin of safety.

Fastenal is a great company with no debt, and it will remain on my own watch list. It has a stellar track record and a continued bright growth outlook. However, its lower levels of operating cash flow relative to earnings suggest to me that Fastenal's P/E is a bit too high at present.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.