How 3M Crushed the Dow in 2013

The Dow Jones Industrials (DJINDICES: ^DJI  ) have had a great 2013, with the average up 22% so far this year. But 3M (NYSE: MMM  ) has almost doubled that performance, with a 42% gain that has demonstrated the ability of the innovation-leading conglomerate to press forward with solid advances in its core businesses.

3M has a long history of creating new products with high demand, and its scope is a lot wider than many investors realize. With products ranging from medical supplies to components for electronics and filtration systems, 3M goes a lot further than just letting you stick a yellow piece of paper on the side of a document. Even in a bull market, what made 3M do so much better than its Dow peers? Let's take a closer look at what moved shares of 3M in 2013.

3M helped sponsor a new "science on wheels" exhibit in Austin, Texas. (Photo credit: 3M)

Stats on 3M

Current Trailing P/E


1-year revenue growth


1-year earnings growth


Dividend yield


Source: S&P Capital IQ.

MMM Total Return Price Chart

3M Total Return Price data by YCharts.

Why has 3M done so well in 2013?
3M's gains have been relatively steady throughout the year, without any major downdrafts punctuating the stock's general uptrend. The stock now trades at an all-time high, with 3M playing an important role in lifting the entire Dow to new records as well.

Toward the beginning of the year, 3M was still trying to answer questions about how it would reawaken its full growth potential. With CEO Inge Thulin having served less than a year in the top executive position, 3M needed to demonstrate its ability to come up with new innovations. At the same time, the key acquisition of Ceradyne complemented many of 3M's existing product lines while offering new opportunities to diversify into promising new industries.

Yet although 3M's conservative approach served the company well in supporting the stock price, it still raised concerns about its competitive position. Rival conglomerate General Electric (NYSE: GE  ) has taken a much more aggressive approach in returning to its industrial roots, finding new opportunities in the energy and aerospace areas and riding fiercely positive macroeconomic trends to their heights. Not only has General Electric doubled down on existing business segments like its aircraft engine division, it has also made new forays into areas such as mining equipment and oil-field services.

Still, 3M has put in place what looks like a viable long-term strategy. With plans to spend more on research and development, 3M has the ability to make headway in a number of areas. Although its industrial segment is its largest for revenue, areas like health care, safety products, and electronics and energy all play important roles in 3M's overall business. In particular, 3M's renewable energy initiatives have a lot of growth potential, with the rebound in the solar industry in recent months presenting a chance for the company to expand its expertise in the area. Health care also represents a possible growth area for 3M, especially given the upheaval in the industry resulting from reform efforts.

With 3M stock up so strongly in 2013, investors are already taking for granted that the company will be able to execute on its efforts to boost growth beyond its current anemic pace. With valuations reflecting their optimism, shareholders could end up being disappointed if 3M fails to live up to its full potential.

Like 3M's returns? Get more like them
Only a few stocks deliver the sorts of returns that 3M did in 2013. Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

Click here to add 3M to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 19, 2013, at 1:21 PM, ARH213 wrote:

    To compare 3M to GE is comparing apples to oranges. Sure, they both are large conglomerates, but there the comparison ends. GE 's business is in large piece parts while 3M's business is "make it by the mile and sell it by the inch". I am sure GE is a large customer of the type of product 3M specializes in. Time will tell whether 3M is able to utilize Ceredyne's expertise. Most ceramic products do not fit the 3M technology expertise of make it by the mile and sell it by the inch. Ceredyne's "piece parts" model would have been a closer fit to what GE does. 3M has had piece parts products in the past (American Lava) and they finally sold that part of their business. They also had a business selling ceramic wafers (both made and sold as piece parts) to computer hard drive companies and they ended that attempt about 12 years ago. Even a company with products in very diverse markets (transportation, communications, medical, office supplies, building materials) like 3M has limited technology capabilities that it is able to profitably exploit. I was an R&D engineer at 3M for 30 years with ceramics expertise. I know how difficult a fit such materials were at 3M. Roofing granules, ceramic fibers and abrasive grit were products that all fit the make it in bulk and sell it small increments needed for 3M success, while large piece parts failed not for bad technology but because they did not fit the total 3M cultural model for business success.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2733124, ~/Articles/ArticleHandler.aspx, 8/29/2016 4:27:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,502.99 107.59 0.58%
S&P 500 2,180.38 11.34 0.52%
NASD 5,232.33 13.41 0.26%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/29/2016 4:11 PM
^DJI $18502.99 Up +107.59 +0.58%
MMM $180.50 Up +1.09 +0.61%
3M CAPS Rating: *****
GE $31.36 Up +0.13 +0.42%
General Electric CAPS Rating: ****