Shares of diversified conglomerate
) hit a new 52-week high of $143.74 on Jun 5, 2014, before closing
the trading session a notch lower at $143.71. This translates to a
healthy one-year return of 32.2%.
3M's share price has been on a steady uptrend since Feb 2014.
Despite its strong price appreciation, this Zacks Rank #3 (Hold)
stock still has enough fundamentals that may further drive its
price upward. The stock is currently trading at a forward P/E of
19.1x and has a long-term earnings growth expectation of 11.3%.
Global credit rating firm
) recently assigned an investment grade Aa2 rating and a stable
outlook for $1.1 billion of unsecured debt issue by 3M. The debt
rating reflects 3M's strong competitive position across an
extensive range of markets, robust operating profitability, stable
free cash flow and a relatively conservative capital structure.
3M has been focusing on restructuring initiatives to transfer
capital from low-margin businesses to more lucrative opportunities,
thus generating better return on capital. Furthermore, the
company's continued investment in research and development enables
it to generate organic growth by innovating products and
applications that capture premium pricing in early stages of their
life-cycle. This enables the company to consistently improve its
margins and capitalize on its brand value. The rating was also
accompanied by a stable outlook, reflecting broad-based
expectations of resilient levels of profitability and free cash
flow across business cycles.
Portfolio management, investment in innovation, and business
transformation are the three key levers on which the company
intends to focus on moving forward. 3M recently increased its tally
for global patents past the 100,000 mark. The company boasts of a
50,000 deep product line ranging from medical adhesives to
reflective traffic signs to films that enhance liquid crystal
displays. It also has 22,800 registered patents.
With a steady stream of innovative products, 3M expects earnings in
2014 to be in the range of $7.30 to $7.55 per share with organic
local currency sales growth of 3% to 6% despite a challenging
macroeconomic environment. We remain bullish on the stock and
expect it to further move northwards.
Other Stocks to Consider
Other stocks that look promising and are worth a look now include
Icahn Enterprises, L.P.
), both carrying a Zacks Rank #1 (Strong Buy).
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