3M's Balanced, Diversified Portfolio Maybe Not The Best Play Today

I have been favorably inclined toward 3M (NYSE:MMM) for quite some time, and I continue to think that 3M's CEO Inge Thulin is doing a great job running this global conglomerate. 3M generates very strong margins, but continues to pursue initiatives that should boost them further over the next three years, and does so while continuing to spend sizable amounts on R&D. The company is also solid from a free cash flow perspective, and has been a relatively good steward of shareholder capital with management willing to sell businesses that no longer meet management's long-term returns targets.

The bad news is that 3M is not cheap and not necessarily the best-positioned company for the current circumstances. 3M's global leverage should be a positive as emerging markets recover and the company's net exporter status does give it some leverage to potential corporate tax changes in the U.S., but it's not all that leveraged to U.S. infrastructure, its tax rate is already pretty good, it would be vulnerable to a stronger dollar and/or trade wars, and its balance between defensive and growth-oriented industries doesn't give it huge leverage to a recovering U.S. economy. While I'm in no rush to sell 3M today, it's hard to argue for this name as a must-own.

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3M's Balanced, Diversified Portfolio Maybe Not The Best Play Today