3M Company: A Winning Stock At A Great Price

We all know that diversification is one of the key fundamentals in long-term financial planning. 3M Company (MMM), a nearly century-old technology company that produces everything from surgical supplies and flat screen TVs to asphalt shingles and that old reliable Scotch Tape, shows how to put that principle into practice. Not only do the company's products cover a wide cross-section of the technology marketplace, but its increasing reach into foreign markets allows the company to offset slow sales in the U.S. with international activity, and also to take advantage of a weak dollar by encouraging foreign investment.

Recent expansions of 3M's holdings in Eastern Europe, South America and Asia allow the company to continue to spread the risk of local instability over a worldwide organization, as well as provide new markets for products that have long been profitable in the U.S.

The third quarter earnings last week did show a reduction in the company's annual revenue forecast, causing the stock price to fall from this year's highest price of $95.82 (only two weeks ago) to its current price in the mid $80s. However, those same 3rd quarter returns also showed a solid increase in net income for the quarter (7.4%), and the company raised its annual earnings forecast to levels above analysts' expectations. What this means for a smart investor is that you can pick up a stock Goldman Sachs is valuing at $97 for almost $10 less -- and you should see a return in fairly short time.

There are risks, of course -- whenever a company expands into new markets, there is an inherent risk of volatility -- as evidenced by last week's revenue forecast reduction. But I think that risk is offset by the potential here, and the strong profit suggests that this is a stock that WILL go up from here.

Type of Stock: Diversified big cap technology company operating in six segments: Industrial and Transportation; Health Care; Display and Graphics; Consumer and Office; Safety, Security, and Protection Services; and Electro and Communications.

Price Target: I expect MMM to hit $100 by the 2nd quarter of next year. In the meantime, you collect a dividend of 2.20%.

Comments

[XN:]

I don't know if accuracy or attention to detail are important attributes when commenting on financial matters, like recommending which stocks to buy or not, but I could hardly keep count of all the inaccuracies contained in this article. First, 3M is not a "nearly century-old" company, it's a 105 year old company. Secondly, 3M does not make flat screen tvs or asphalt shingles. They make brightness enhancing films for flat screens and granules for shingle products. Third, 3M is not just starting to expand operations overseas, they have been in over 60 countries for more than 30 years. In particular, they have been in Asia (China specifically) for more than 20 years and all told, more than 60 percent of revenue is generated outside the US. Finally, 3M's YTD high was October 10 with an intra-day high of 97.00, while the high closing price was October 5 at 95.85 (not 95.82).
I just think if you are going to actually take the time to write a review of a stock and ultimately recommend a buy or sell, you should do a better job of getting the facts straight.

2007 Oct 30 11:31 PM

[King Kang:]

Not only is 3M involved in a multitude of businesses, but their Directors are some of the most experienced in the corporate world, with leadership positions across the entire business spectrum www.newsvisual.com/new... . Everything from food and beverages to finance to government.

2007 Oct 31 02:53 PM