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What Pushed 3M Shares to a New Record

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

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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 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.

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