With a ton of selling comes a ton of cash. Its been a while since I had 20% cash, but the recent selling spree has allowed me to have 23% in cash. Now, keep in mind I am investing on a mechanical basis which means I am doing little analysis and relying on the magic formula for screening. Next, I want a low P/E with consistent return on equity. As of today, 3M appears on the magic formula screen for the top 100 companies with a minimum market cap of 2000 million.
Nothing too exciting here. 3M has an array of simple but profitable businesses. According to Dividend Growth Investor, 3M is a dividend aristocrat who has delivered annual returns of 11%. Its 10 yr ROE averages about 30% with ROA averaging about 13%. 3M currently sports a price-to-earnings ratio of 13 well below its 10 year average of 21.According to the magic formula website 3M currently has a pre-tax earnings yield of 11% and pre-tax return on capital between 50-75%.
3M is a funny find as it was not in the magic formula screen yesterday. Normally, I only run the screen on weekends but decided to take a look anyway and on top of the list lied 3M (maybe it was a sign).
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