3M Co. (MMM)

J.P. Morgan did a list of 15 stocks whose free cash flow yield was fairly substantial and have had great resilience in down markets and have outperformed markets on the upside. This was one of them. This is an international conglomerate including healthcare. Thought it was a bit on the expensive side but based on the report by J.P. Morgan, he is going to have a look at this one.

Generally speaking, industrials will do well as the economy continues to recover in the US. Dividend looks pretty solid at 2.4%. Growing at 10% and trading around 15X earnings. Not exactly cheap but it should continue to do well.

Industrial companies usually do very well from January through until May. Stock has just hit an all-time high. Technically it looks good. If you can buy on weakness in the next 2-3 weeks there is still a period of seasonal strength through until May.

He wouldn’t be as worried about their global growth as he would be in their operational risks. Have had a bit of an erratic ability to provide consistency of earnings. If you own, he would move to another industrial.

Feels it is cheap right now but is probably likely to stay cheap for the next little while. Global growth which is not overly robust, doesn’t favour the space that this company is in. He likes their broad geographic exposure. 40%-50% of their revenues are earned outside of the US with quite a bit in more rapidly growing emerging markets. You’ll have to be patient with it. 2.5% dividend.