3M (MMM) a solid company to invest in, for both the income and growth portfolio

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3M (MMM) a solid company to invest in, for both the income and growth portfolio

Published Date: 2018-05-03 | Source: Share Picks USA | Author: Bruce Ingram | Comments

3M (MMM) a solid company to invest in, for both the income and growth portfolio

3M price has dropped by 25% from its high of $259 towards the end of January this year. This is a good time to look at adding this share to your portfolio.

About 3M
More than a century ago, 3M started as a small-scale mining venture in Northern Minnesota, then named Minnesota Mining and Manufacturing Company.

The company is broadly divided into 5 Segments

  • Health Care - serves markets that include medical clinics and hospitals, pharmaceuticals, health information systems, and food manufacturing and testing
  • Safety and Graphics - serves a range of markets for the safety, security and productivity of people, facilities and systems
  • Industrial - serves a range of markets, such as automotive original equipment manufacturer and automotive aftermarket, appliance, paper and printing, packaging, food and beverage, and construction
  • Electronics and Energy - provides insulation, splicing and interconnection devices, touch screens, renewable energy components, infrastructure protection equipment
  • Consumer - serves markets that include consumer retail, office business to business, home improvement, drug and pharmacy retail, and other markets

Some fundamental facts

Current PE 24.32%. Current price $195.02 Annual Rate of Return, 10.4% from Jan 1999 to Dec 2017

Dividend 2.77%. 3M has paid dividends for over 100 years and an increasing dividend for 60 years.

Market Cap $115.6 Billion. 2017 Revenue $31.7 Billion

A high percentage of income comes from consumables (50%), creating a continuous market for their products.

3M invests 5 to 6% of total sales in R&D which helps in maintaining its Moat. About a third of its products have been launched in the last 5 years. The company's growth is mainly organic due to the significant R&D spend as well as their highly disciplined capital investment.

The recent price drop can be attributed to raw material price increases as well as the company lowering its guidance for organic growth.

The company consistently delivers free cash flow.

Forecast estimated annual ROR to Dec 2020 13%.

3M is a solid, well managed company that has consistently performed well over many years. Currently 3M is fairly valued. It is difficult to find an opportunity to buy into this company at fair or below fair value as the market places a high value on 3M. You may want to take advantage of the recent price drop and add this share to your portfolio.



Disclaimer: Please note that I am not a Registered Financial Planner. The articles I write are based on my own personal research and for my own use and is not to be construed as financial planning advice. At all times readers are urged to exercise caution when investing in any financial instruments, to do their own research.


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