3M Scales a New 52-Week High - Analyst Blog

Shares of diversified conglomerate 3M Company MMM hit a 52-week high of $141.83 during the trading session on May 2, 2014, before closing the trading session a notch lower at $140.12. This translates to a healthy year-over-year return of 29.9%.

3M's share price has been on a steady uptrend since Feb 2014. Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamentals that may further drive its price upward. The stock is currently trading at a forward P/E of 18.8x and has a long-term earnings growth expectation of 11.3%.

Growth Drivers

Impressive first-quarter 2014 results that comprised record sales across its businesses, solid bottom-line growth and healthy return of capital were the primary driving factors for the stock.

Net sales were up 2.6% year over year to $7.8 billion, buoyed by 4.6% organic local currency sales growth across all geographic regions. Earnings for the reported quarter improved 11.2% to $1.79 per share. At the same time, 3M returned $2.3 billion to shareholders via dividends and share repurchases and converted 66% of net income to free cash flow.

3M also increased its quarterly dividend by 34.6% for the first quarter of 2014. The company expects to further leverage its balance sheet to consistently provide higher returns to shareholders.

Despite a challenging macroeconomic environment, 3M expects earnings in 2014 to be in the range of $7.30 to $7.55 per share with organic local currency sales growth of 3% to 6%. The company remains focused on inventing new products as it enjoys a competitive advantage worldwide.

Portfolio management, investment in innovation, and business transformation are the three key levers on which the company intends to focus moving forward. 3M will also continue to invest in capital expenditures and research and development to support organic growth across the globe.

Other Stocks to Consider

Other stocks that look promising and are worth a look now include Federal Signal Corp. FSS, Icahn Enterprises, L.P. IEP and Noble Group Ltd. (NOBGY), each carrying a Zacks Rank #1 (Strong Buy).