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Sell This Dow Stock, Goldman Sachs Says

BOSTON ( TheStreet) -- 3M (MMM - Get Report), the maker of Post-It Notes and Scotch Tape and a member of the Dow Jones Industrial Average since 1976, is a stock that investors should sell, Goldman Sachs analysts recommend.

Goldman's Terry Darling says the investment bank is neutral overall on multi-industry companies due to the structural change in Europe, inflation in emerging markets, and government debt refinancing.

But not all industrial companies are created equal, and the Goldman team elected to downgrade 3M to "sell" from "neutral" and industrial company Emerson Electric (EMR - Get Report) to "neutral" from "buy" based on "lack of near-term catalysts" as well as the macro uncertainty.

Shares of 3M were down more than 1% to $83.40 in early trading Wednesday. Emerson Electric shares, meanwhile, were down 1.4% in early trading to $48.21. Despite downgrading 3M to "sell," the Goldman analysts increased their price target on the stock to $87 from $82 and on Emerson Electric to $54 from $51.

Even though key macroeconomic questions remain, Darling says the Goldman team is encouraged that the European Central Bank's liquidity actions in December and recent manufacturing data will increase risk-taking in the first half of 2012.

As part of the team's plan to be tactically constructive, the analysts upgraded industrial automation company Rockwell Automation (ROK - Get Report) and construction-equipment maker Graco (GGG - Get Report) to "buy" from "neutral" and "sell," respectively.

Additionally, Darling and the Goldman team see increased risk-taking in early 2012 as also benefiting power-management company Eaton (ETN - Get Report), which is on the investment bank's Conviction Buy List and is what Darling calls "a classic 'laggard to leader' candidate."

Goldman also has manufacturing components maker Dover (DOV - Get Report) rated as a "buy" and the bank counts Dow member General Electric (GE - Get Report) as its "favorite super-cap for a combination of offense (visible late cycle industrial growth, declining credit losses) and defense (dividend yield)."

-- Written by Robert Holmes in Boston.

>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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