Following is a sampling of stocks in our coverage universe that recently jumped to 5 stars. By way of background, we award a stock 5 stars when it trades at a suitably large discount--i.e., a margin of safety--to our fair value estimate. Thus, when a stock hits 5-star territory, we consider it an especially compelling value.
To get a
complete tally of stocks that have recently jumped to 5 stars--as well as our
full list of 5-star stocks--all you have to do is take Morningstar Premium Membership for a test spin.
Click here to sign up for a free trial.
3M Company
- Business Risk: Below Average
- Economic Moat: Wide
- Price/Fair Value Ratio*: 0.83
Innovation and strong manufacturing capabilities have long been the trademarks of 3M (MMMMMM). Morningstar analyst Scott Burns points out that the firm has historically pumped more than 6.5% of its revenue back into R&D and has always been able to attract top-tier scientists and engineers to staff its labs. Another 3M advantage is its ability to leverage technologies across different businesses and continuously find new uses for basic technologies. Although many of 3M's products are high-margin branded or patented products, the company has made things such as sandpaper, adhesives, Post-it notes, and Scotch tape for decades. 3M fiercely protects its patents and uses its protected period to perfect its production processes. Combining this production expertise with the company's global manufacturing base makes it cost-prohibitive for rivals to undercut its prices once items fall off patent. As a result of its patents, brands, and low-cost production, 3M has averaged 18% operating margins over the past five years. After a period of stagnation in the 1990s, Burns believes a reinvigorated 3M has returned to its accustomed leadership position in the industrial world.
Full Analyst Report: 3M Company
Stock Analyst Note: "3M Closes Tough 2006" (1/30/07)
No comments:
Post a Comment