3M COMPANY $139 (New York symbol MMM; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 648.0 million; Market cap: $90.1 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.3m.com) started up in 1902, when it was called the Minnesota Mining & Manufacturing Company.

It now makes over 55,000 different products, including pressure-sensitive masking and packaging tape, air purifiers, medical device components and reflective highway signs. Top brands include Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.

3M’s wide variety of products cuts its reliance on a single industry or customer. Sales from outside the U.S. account for two-thirds of its total.

Strong recovery from recession

Because the company’s product base is so broad, its results tend to track the overall global economy. As the world rebounded from the 2008/2009 recession, 3M’s sales jumped 33.5%, from $23.1 billion in 2009 to $30.9 billion in 2013.

Earnings gained 45.9%, from $3.2 billion in 2009 to $4.7 billion in 2013. Per-share earnings rose at a faster rate of 48.7%, from $4.52 to $6.72, on fewer shares outstanding.

Part of 3M’s growth comes from acquisitions, which tend to enhance its expertise in certain fields. Examples include Ceradyne, a maker of strong, temperature- resistant ceramics, which 3M bought for $798 million in November 2012.

3M recently paid $855 million for the remaining 25% of its Japanese joint venture with Sumitomo Electric Industries. This business was formed in 1961 and makes over 30,000 products, mainly for Asian markets. Owning 100% of it will add $0.08 a share to 3M’s annual earnings.

Research keeps paying off

Another key to 3M’s growth is its ability to develop innovative products. It spent 5.5% of its sales on research in the latest quarter, but it plans to raise that to 6.0% by 2017. This should help 3M meet its goal of raising its sales by 4% to 6% a year to 2017.

The company’s strong balance sheet continues to support its expansion. As of June 30, 2014, its longterm debt was $5.3 billion, or a low 6% of its market cap. It also held cash of $3.0 billion, or $4.64 a share.

3M recently announced that it would buy back up to $12 billion worth of shares. There is no time limit for these purchases. These buybacks will help increase the company’s likely 2014 earnings by 11.3%, to $7.48 a share.

Market leadership offsets high p/e

The stock trades at 18.6 times its 2014 earnings estimate. That seems high for a cyclical manufacturing firm, but 3M is a leader in most of its markets. That means it can charge higher prices, particularly for new products that face little competition.

In addition, 3M has raised its dividend each year for the past 56 years. The current annual rate of $3.42 yields 2.5%.

3M is a buy.