Two Twin Cities Buyback Bargains

03/20/2007 12:00 am EST


David Fried

Editor, The Buyback Letter

Ticker symbols MDT MMM

David Fried, editor and publisher of David Fried’s Buyback Letter, says Medtronic and 3M, two major companies headquartered in Minneapolis, have bought back a lot of their shares and look attractive now.

Here’s a brief rundown on [two of] the stocks we added [to our Stock-Pickers Portfolio].

Medtronic (NYSE: MDT) is an international global leader in medical technology. With deep roots in the treatment of heart disease, Medtronic now provides a wide range of products and therapies that treat disorders and illnesses relating to cardiac, vascular, neurological, diabetes and spinal function. They like to say that every five seconds, somewhere in the world, a person’s life is saved or improved by a Medtronic product or therapy.

Medtronic currently ranks 72nd on Fortune magazine’s 10th annual “100 Best Companies to Work For” list. It also recently moved up the Fortune 500 list to #235 (2006), and was named to Fortune’s annual list of "America's Most Admired Companies" for the ninth consecutive year and ranked #1 in its industry sector (2006).

Medtronic earned 61 cents per share in the third quarter of fiscal year 2007, ended January 26, up 11% from 55 cents [the previous year]. That beat the analyst forecast of 58 cents per share. Revenue of $3.05 billion was up 10% from a year ago, but lower than the consensus forecast. Medtronic reduced shares outstanding by 4.6% in the last 12 months.

3M (NYSE: MMM) is a $22-billion diversified technology company and one of 30 companies that make up the Dow Jones Industrial Average. It is organized into six main businesses: consumer and office; display and graphics; electro and communications; health care; industrial and transportation; safety, security and protection services.

3M brands are familiar to most consumers —Scotch®, Post-it®, Scotchgard™, Thinsulate™, Scotch-Brite®, Filtrete™, Command™ and Nexcare, to name a few--and a core strength is the company’s ability to apply its technologies to an endless array of customer needs.

3M makes more than 55,000 products [and has] 30-plus core technologies. Its International sales of $14.1 billion represent 61% percent of company's total.  3M sells its products in nearly 200 countries and employs more than 69,000 employees.

In mid-February, the board authorized the largest share repurchase in company history-– a $7-billion, two-year program. The company also declared its 49th consecutive annual dividend increase of 4.3% (48 cents per share). “While our first priority remains investing for growth, returning cash to our shareholders remains an integral part of our strategy,” said George W. Buckley, 3M’s chairman, president and CEO. “The strength of our operations and our confidence in 3M’s future continue to afford us the flexibility to do both.” Amen to that, George.

During the calendar years 2004-2006, the company returned more than $10 billion in cash to shareholders through the combination of share repurchases and cash dividends 3M reduced shares outstanding 2.8% during the last 12 months.

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