Friday, February 2, 2007

MMM

I took a position in MMM yesterday at $74 a share and here is why.

- They got hammered this week (on an earnings miss).
- Have a history of innovation.
- Have a historically low multiple 15X last years earnings.
- 60% of their revenues are now outside of North America.
- Projected earnings growth of 10% annually.
- 2.5% dividend yield that increases yearly (paid since 1916).
- Diversified product offerings.

The only real negatives I can see in this name are the possible slowdown of the US economy.

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)

3 comments:

Query said...

I'd like to find a beaten down stock, in a really beaten down sector, that will be a winner 3-5 years from now.

Think American Airlines (AMR) in 2003 -- it was trading at just a coupe dollars per share. Today it's at $37.

I think MMM is fine for slow stable growth, but I'd like to find one or two potential barn burners (like the airlines four years ago).

Middle Class Millionaire said...

Ya so would I (and probably every other investor on earth). Are there any sectors in particular that you’re looking at?

In my opinion most sectors in Canada are either overvalued or fairly valued, with the exception of the forestry industry (although it has had some significant gains over the last couple of weeks). I believe that there is currently more value in the US however, the only sector that seems to be undervalued is pharmaceuticals.

QUALITY STOCKS UNDER 5 DOLLARS said...

Interesting