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Uncertain Times Won't Derail 3M

This canary in the economic coal mine has proved it can stay profitable in a recession.

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With a diversified revenue base and mostly short-cycle businesses,  3M (MMM) tends to feel the pinch of economic weakness very rapidly. However, it proved its ability to maintain decent profitability during the last recession and was able to increase pricing as volume cratered. Given its strong returns on invested capital, solid balance sheet, and relatively conservative need for capital allocation, we believe 3M is an attractive investment.

The company's expectations for revenue and profitability in 2012 nearly mirror our own. Management expects slowing volume growth this year, but as in 2009, it believes sales can get a boost from price increases and acquisitions. In all, including currency headwinds, 3M forecasts a 3%-8% top-line increase for the year.

Adam Fleck does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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