Is the world a better place?
When I see industrials moving up the way they are and have been for days, I think to myself, forget President Trump, forget U.S. infrastructure, we are going to see some pretty good growth overseas and the buyers are trying to get ahead of the darned good quarterly results that will be announced less than a month from now.
Take 3M (MMM) , a quintessential industrial. 3M's stock has quietly moved 13 points since it last reported, including a remarkable jaunt right through $200. This is not an idle move. This company's stock tends to track its business very closely, and all I can say is I bet it will have a good quarter because its end markets are all getting stronger. Remember that only 40% of 3M's business is in the U.S., and that means its industrial and electronics and graphics businesses will not be kept down by sluggish U.S. growth.
More important, when you look at the broad portfolio and countries where 3M's products are sold, you are going to see not only organic growth but also currency-aided growth as the U.S. dollar isn't as strong as it was last year.
Can you imagine seeing a combination of "better than expected earnings" and "raised forecast" coupled with a continued stock buyback? That's pretty much what you should expect when you see 3M's report. And the market won't care that the currency has added a tailwind. It will lap it up as if it's real earnings for certain.
3M's no anomaly. I think you might get the exact same kind of earnings news from Honeywell (HON) and United Technologies (UTX) , both with broad product portfolios and more than 40% weak-dollar exposure.
This is the theme that's got a lot of stocks going.
Where else should we be looking for some weak-dollar relief? How about the stock of Johnson & Johnson (JNJ) , which has been phenomenally strong here. It's been buffeted by currency for ages.
So, for that matter, has IBM (IBM) , which is trying like heck to put in a bottom with its new businesses outrunning the old ones. It's been savaged by Warren Buffett, but perhaps he soured on it right at the cusp of the turn?
It's clear that these stocks, with the exception of IBM, have already put on some serious points.
But here's a surprising non-industrial that I think might be worth considering: Procter & Gamble (PG) . Hear me out on this. I know Procter doesn't have that economic sensitivity that I so desire from so many of the big industrials.
However, it also hasn't moved that much, off four points from its high and yielding more than 3% in a yield-hungry environment. I mention P&G for two reasons. One is that almost no company has spent as much time as P&G explaining why it has been hit so hard by currency and how it can't even hedge a lot of the places it's been dinged.
Second is now that General Electric's (GE) Jeffrey Immelt has been replaced by John Flannery as CEO, I believe Nelson Peltz and his Trian Fund will turn their attention to Procter & Gamble. Like with GE, I expect a Trian white paper soon detailing how P&G could take costs out. I also expect the company's stock will jump when this process begins, as was the case with GE, which moved from the mid-$20s to $30 when Peltz got on board. (General Electric is part of TheStreet's Action Alerts PLUS portfolio.)
Time to get involved yourself with a great company where you can win in so many ways, but especially with Peltz in there fighting for you.
