Our first idea is an industrial company that makes a wide range of consumer, commercial, and industrial products and has a current annual dividend yield of 2.93%, paid quarterly. Our second recommendation is some profit-taking on a previous pick.
3M Company (MMM)
From Dow Theory Forecasts
3M is being added to the Focus List. 3M occupies an attractive position that straddles both the pandemic and post-pandemic worlds. In the past year, 3M has increased capacity for respirator masks to 2.5 billion annually, four times higher than 2019 levels.
3M also makes products for the industrials, transportation, and consumer markets, which should get a lift from an economic rebound as the pandemic subsides. The consensus calls for 10% higher earnings per share for 2021 on 7% revenue growth.
Shares trade at 20 times estimated 2021 profits, a 28% discount to the median S&P 1500 Index industrial conglomerate. 3M is also a Long-Term Buy.
Richard Moroney, CFA, Dow Theory Forecasts, dowtheory.com, 800-233-5922, April 12, 2021
Sell: Booz Allen Hamilton Holding Corporation (BAH)
From Dow Theory Forecasts
Updated from WSBD 830, June 16, 2020
We are dropping Booz Allen Hamilton from the Long-Term Buy List. The stock has struggled to recover ground lost after its messy December-quarter report. Not helping matters, analyst profit estimates for the March and June quarters dipped after management warned of potentially choppy sales.
Richard Moroney, CFA, Dow Theory Forecasts, dowtheory.com, 800-233-5922, April 12, 2021