I’ve written a lot in the past about how 3M’s (MMM) business mix and operational strategy leads it to being among the first to enter into downturns, but also among the first to emerge, and that would seem to be holding true again, as 3M returned to organic growth in the third quarter. Looking ahead a bit, I would expect to see further improvement in key end-markets like autos, general manufacturing, and electronics, but the resurgence of COVID-19 cases in Europe and the ongoing growth in cases in the U.S. does certainly create some risks.
3M has continued to lag industrial names I liked better a quarter ago, including Parker Hannifin (PH) and Eaton (ETN), but the relative valuation is starting to look more interesting. As I’ve said before, I think 3M management needs to take a more comprehensive look at its business mix and strategic priorities, but long-term FCF growth in the mid-single-digits can still support a total annualized return of around 8%, which I believe stacks up pretty well to likely market returns over the next few years.
Read more here:
3M Delivers Familiar "First In, First Out" Performance And Still Offers Some Value
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