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Three Reasons to Take Note of 3M

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The company holds up, despite its disappointing outlook and the off market.

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Yesterday I was dead tired and dogging it. Today I have more energy than I know what to do with, even after my early-morning treadmill run.

Asian stocks took a bit of a pummeling overnight. The Hang Seng and the Nikkei were off 1.44% and 1.34%, respectively. European stocks, however, were in positive territory early this morning. And here in the US, we're currently trading higher.

Here's what I'm seeing this fine but rain-soaked Wednesday morning:

3M (MMM):
The company that brings us "Post-Its" offered up its outlook and unfortunately, it wasn't too terrific: It indicated it's looking for $4.50 to $4.55 a share excluding items in 2009. The estimate I'm seeing is $4.57. And for 2010, it's looking for $4.85 and $5 a share, whereas the estimate I see is $4.94.

Some thoughts:

1. If it were to hit those numbers, it wouldn't be the end of the world for a giant like 3M. And something tells me its management may actually be playing it a bit on the conservative side.

2. I also think it's a good sign that it didn't take too much of a whooping, despite the market being off yesterday and the disappointing news.

3. That said, 3M's shares are pretty fairly valued right here and I don't see any real reason to bottom-fish -- and I feel that way even though it could rebound early in today's session. My cautious tune may change, though, if it pulls back to the high $60s or lower $70s.

Texas Instruments
(TXN):
The company was out with its fourth-quarter outlook. Per the release, it indicated it was looking for "EPS: $0.47-$0.51, compared with the prior range of $0.42-$0.50." It also goosed its revenue outlook.

My take:

1. Sounds pretty good, but I'm concerned that some might not see it as strong enough -- the bar is often set pretty high for this company.

2. The outlook was good news and the stock remains one of my top long-term favorites. It could still have some legs here in the short-run too, which is why I view a dip as a potential opportunity.

3. The company has been whipping estimates over the last several quarters -- you have to love that.

Dr. Pepper Snapple (DPS):
Justin Sharon points out in his article this morning that Calyon slapped a Buy rating on the company.

My take:

1. I'm a bull on Dr. Pepper Snapple, and while I'm talking about this general space, I'm a bull on the other big soft-drink companies -- Coke (KO) and Pepsi (PEP) -- too. Consumers seem to be going out more, which could bode well for quick-service and other restaurant chains, and in turn, the drink companies as well.

2. The company has been beating the daylights out of estimates, which I can't ignore. In fact, I think it will pop past the fourth-quarter estimate, which is $0.44.

Kimberly-Clark (KMB):
Justin also points out that Barclays lopped its rating on Kimberly-Clark from Equal Weight to Underweight.

I admit it's not the sexiest story out there, but the shares could have some upside over the next year (and as far out as the next decade). Right now it trades at only about 14.1 times the 2009 estimate, which is quite reasonable, and it's expected to show some nice growth from this year to next. I'd see a dip -- if there was one on the heels of this news -- as an opportunity.

Have a great day!
No positions in stocks mentioned.

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