Please ensure Javascript is enabled for purposes of website accessibility

What Pushed 3M Shares to a New Record

By Motley Fool Staff - Oct 28, 2017 at 1:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The highly diversified manufacturer is a proxy for the global economy, but it’s also making smart moves in its own house.

In this Market Foolery podcast segment, host Chris Hill is joined by Motley Fool investor at large Tim Hanson to discuss 3M's (MMM -0.71%) excellent third-quarter earnings beat. The stock is up about 33% so far in 2017, but what's perhaps more impressive is how well it manages all its varied divisions. 

A full transcript follows the video.

This video was recorded on Oct. 24, 2017.

Chris Hill: Sticking with Dow stocks, 3M shares are also hitting a new all-time high. Third-quarter profits came in higher than expected. This is another one. Year to date it's up 33%.

Tim Hanson: Yeah, similar story. 3M is obviously a little more diversified than Caterpillar. They have technology businesses, they have industrial businesses, they have consumer businesses like the Post-it, they have healthcare businesses, so on and so forth. So it's really a proxy for the global economy, and the global economy continues to perform. And 3M has done a nice job allocating capital in terms of repurchasing shares, paying dividends. They've made some strategic investments to grow the business. I think they grew about 5%-6%. Any time 3M is going to grow above the rate of global GDP, they're going to produce pretty good results, and that's what they're doing.

Hill: Here's an enjoyable five minutes I would recommend to absolutely anyone interested in investing. Go to 3m.com. Go to the 3M website, and look at how many countries this business operates in. To your point, it's so much more than Post-it notes. That's always the default. And all the earnings stories today, "3M, the maker of consumer products, including Post-it notes," I just pulled up their healthcare division -- I don't know who runs this company, but they're doing a bang-up job. We've talked at various points about similarly sized companies that struggle with executing across all of their divisions, in some cases to the point where they say we have to start selling these off. Procter & Gamble, of course, leaps to mind. But 3M, this is another quarter for 3M where every division was doing well.

Hanson: I've actually personally owned 3M stock now for 11 years, and some years are not as good as others.

Hill: Do you ever forget that you own it?

Hanson: Yeah, constantly.

Hill: Because you're not checking.

Hanson: Well, I'm getting on in age, Chris. I forget most of what I own at this point. But 3M quietly chugs along, like I said. It's never going to grow 20%-30%.

Hill: Except this year, when it's up 33%.

Hanson: Well, the stock. But sales, a little bit excess of GDP. Responsible capital allocation. That's what you want from a company like that.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3M Company Stock Quote
3M Company
MMM
$128.49 (-0.71%) $0.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.