After breaking out of a base about 15 months ago,3M (
) rose 49% by the end of 2013.
For a blue-chip dividend stock, that's a remarkable
Since then, the stock has consolidated as it works on a stage
two pattern. Given that 3M isn't a glamour stock, expectations
surrounding any new breakout should be lowered.
The stock has already had a big run, and it is not a CAN SLIM
Also, the current consolidation is on the sloppy side. Weekly
trading ranges have included some wild action. The left side of
the base includes two days of gap-down action on Jan. 23-24. What
was happening then?
On Jan. 23, Markit reported that manufacturing contracted in
China for the first time in six months. Former hedge-fund manager
Jim Cramer of CNBC's "Mad Money" mentioned 3M's ties to China and
said, "Not for me." (Markit reported further contraction in
February and March.)
Big-cap 3M derives about 10% of its revenue from China, and
Bloomberg News recently reported that the company expects China
sales to grow three times faster than overall company
On the plus side, 3M grew earnings 15% in Q4, its best gain in
14 quarters. The Ceradyne acquisition, which was wrapped up in
November 2012, helped growth. Also, shares outstanding declined
3%, which added 5 cents to EPS. Without the change in shares
outstanding, EPS growth would have been 11%.
The company operates in more than 70 countries and gets about
two-thirds of its revenue from outside the United States. Because
of the hefty foreign-revenue factor, a strong U.S. dollar would
hurt sales and earnings.
At the Jan. 30 earnings call, CEO Inge Thulin said the company
is hoping to do $5 billion to $10 billion in acquisitions through
In December, the company increased the quarterly dividend 35%,
from 63.5 cents a share to 85.5 cents. The annualized yield is
2.5%. The payout has more than doubled since 2005.