Cramer notes the vast majority of industrials that have reported earnings this season are doing quite well not just on earnings, but on revenues because of Europe. The three aforementioned companies have improved in Europe, as has Starbucks (SBUX - Get Report)
These companies make a lot more money when they do a little bit better on the revenue line. As a result, Cramer pegs industrials as the place to be at this point in the cycle.
Separately, TheStreet Ratings team rates 3M CO as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate 3M CO (MMM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, notable return on equity and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MMM's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.68% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MMM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 3M CO has improved earnings per share by 11.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, 3M CO increased its bottom line by earning $6.72 versus $6.31 in the prior year. This year, the market expects an improvement in earnings ($7.45 versus $6.72).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Industrial Conglomerates industry and the overall market, 3M CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $1,092.00 million or 9.85% when compared to the same quarter last year. In addition, 3M CO has also vastly surpassed the industry average cash flow growth rate of -69.90%.
- You can view the full analysis from the report here: MMM Ratings Report