3M (MMM) 2014 Review

The 3M Company (formerly Minnesota Mining and Manufacturing) is a broadly diversified technology and manufacturer of great brands in industrial, health care, consumer, safety and graphics and electronics and energy (50,000 products sold in over 70 countries). The company earns over a 20%+ return of equity and has generated profit growth of 10% annual rate over the past 10 years. While dividends have not kept pace as the company reinvested cash flow in new businesses, the dividend payout ratio should increase in the next several years.  The pillars of its business plan are:

(1) invest in strengthening and streamlining its supply chain,

(2) increase its brand building marketing focus on high growth overseas markets, using acquired local or regional brands where it makes sense,

(3) raise its investment in R&D to advance the 3M brands,

Negatives:

(1)    its large international business exposes it to currency fluctuation risks,

(2)    its businesses are highly competitive,

(3)    success depends on new product acceptance.

       MMM is rated A++ by Value Line, carries a 20% debt to equity ratio and its stock yields 2.5%

   Statistical Summary

                 Stock       Dividend       Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2004

MMM        2.5%           11%             43%             10

Ind Ave * 

                Debt/                        EPS Down       Net        Value Line

                Equity         ROE      Since 2004      Margin       Rating

MMM       20%            28%           2                 16%          A++

Ind Ave*

*the Diversified Company Industry operates in so many varied products and services, comparable numbers would be of little analytical value.

 

     Chart

            Note: 3M stock made great progress off its March 2009 low, quickly surpassing the downtrend off its October 2007 high (straight red line) and the November 2008 trading high (green line).  MMM is in uptrends in all major timeframes: long (blue lines), intermediate (purple lines) and short (brown).  The wiggly red line is the 50 day moving average.  The Dividend Growth and High Yield Portfolios own full positions in 3M.  The upper boundary of its Buy Value Range is $79; the lower boundary of its Sell Half Range is $190.

   

http://finance.yahoo.com/q?s=MMM

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