Investing: 3M Co. expands its market overseas
Question: I’m not sure whether to keep my 3M Co. shares. Your thoughts?
Answer: Nothing seems to hold down the manufacturer of Scotch tape and Post-It notes as it introduces innovative products and expands its overseas reach.
Sales of its automobile, water-filtration, healthcare, consumer and office products have been strong. They have universal appeal and account for 3M’s robust growth in developing markets such as India, China and Brazil.
Yet to remain profitable, this diversified company — originally named Minnesota Mining & Manufacturing — must introduce new technologies and make wise acquisitions amid economic uncertainty.
The company expects that disruptions from Japan’s earthquake, tsunami and nuclear woes will cost it about 1 percentage point in sales growth this year. But the firm has a strong balance sheet and continues to work to improve its international supply chain.
Another question mark: The company has no clear successor to Chairman and Chief Executive George Buckley, under whom 3M stayed profitable throughout the recession. He is scheduled to step down early next year when he turns 65, unless the board extends his term.
Last year, 3M’s earnings climbed 28% to $4.1 billion as its revenue jumped 15% to $26.7 billion. In the first quarter of 2011, net income rose 16% from a year earlier as revenue again shot up 15%.
The stock is up 5.3% this year. Its ratings from analysts consist of six “strong buy” grades, five “buys,” six “holds” and one “underperform,” according to Thomson Reuters.
Question: Is BlackRock Global Allocation a good mainstay for my personal portfolio?
Answer: To hold this fund, you must take a long-term view. It has strong long-term results, but its one-year performance won’t always be stellar.
You also need to keep in mind that, as a global fund, it doesn’t invest strictly overseas. U.S. securities recently represented more than one-third of the $53-billion portfolio.
The fund has gained 14% in the last 12 months, ranking it in the lower one-third of so-called world allocation funds. Its five-year annualized return of 7.1%, however, placed it near the top one-fourth of its peers.
The portfolio’s managers typically take “a much longer-term perspective than many of the world allocation funds, which means it can appear out of step with its peers at times,” said Michael Herbst, mutual fund analyst with Morningstar Inc.
Dennis Stattman, lead manager since the fund was launched in 1989, seeks areas of the global markets with significant opportunities or deterioration and takes small positions in hundreds of stocks, bonds, currencies and occasionally derivatives.
Top holdings recently included shares of SPDR Gold Shares, ExxonMobil Corp., Apple Inc., Microsoft Corp., IBM Corp. and General Electric Co. as well as U.S. Treasury notes and German and Brazilian government bonds.
The fund imposes a 5.25% sales charge on purchases of fund shares and requires a $1,000 minimum initial investment. Its annual expense ratio is 1.09%.
Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com.
