 Good day, fellow investors. Last week, we analyzed Cairneval Cruzes as a cyclical stock and one of the most requested stocks when I asked which one do you want to see me analyze next was FreeM. So here I am, I enjoyed this analysis, my analysis, spending time on analyzing FreeM and I'm happy to present what I found by looking at this great business and what might be the most intelligent investment strategy when approaching FreeM stock. Let's start. Just an interesting note, the FreeM company used to be called the Minnesota Mining and Manufacturing Company, therefore the FreeM's. What are we going to discuss? Yes, we're going to start by looking at the stock price chart. You'll be amazed, Sven is looking at charts. Well, I'll show you how I look at stock market charts. Then we're going to categorize the stock and then discuss the business and then the investment strategy that I think will give you a lot of value when it comes to this stock. Let's go. If you like this kind of analysis, my categorization, don't forget to smash that like button and subscribe and click that notification bell. Thank you, it means a lot and supports the channel. Well, where the proceeds go to charity. Now, let's look at the long-term chart. From 1987, the long-term stock market return is 7 to 8% depending when you take the starting point. Which tells me one thing, FreeM is a compounder, has a good return on capital, on earnings, which means it is a great business. And when you see these long-term charts, yes, the stock is up what, 10 times. That's not bad. That actually means a lot. It means it's a good business compounding and it's likely that it will continue compound over the long-term from a business perspective. Then you have to see, okay, what's the current market capitalization, 83 billion. And then you have to see at what rate it will continue to compound. And then it will give you a good indication whether it is good investment or not. But I like this chart, long-term chart, of course, 30 something years, because it tells me, okay, there is something of quality here, something that keeps delivering returns to investors. Let's go to categorize this stock as it is common. Since we started analyzing one up on Wall Street, you have all the summary in my free stock market course in the links below. Check that out. Now, 3M is a slow-growing stock, which means a flat chart. The stock can move on valuation, but it's likely to grow slowly. There is a generous and regular dividend, Apple dividends and payouts are large, but 3Ms are similar. And you have to check the dividend safety. Low payout gives a caution in, when it comes to a recession. And let's say 3M is somewhere in the middle as the dividend payout has been increased recently. So what do we mean the stock can move on valuation? If you look over the last seven years, the stock didn't move much. 3M is now where it was in 2013. So, okay, on my valuation, it moved up to 2018, but then it has been a sharp decline. And similarly, 2006, we see that, okay, the earnings, I took this from the 2006 annual report, the earnings did increase from the 2001 recession to $5 a share, but the stock also from 2003 to 2012 didn't move much. So already then it was a slow grower and from 2001 to 2006, revenues increased from 16 billion to 22 billion. Good growth, now the growth is even slower, but not that much. So yes, the stock can move on valuation if we make eight, the current earnings price earnings ratio of 15, we are at the stock price of 120, price earnings ratio of 20, we are at the stock price of 160, which is above the current level. But the company is really maturing and you can see that over the last 10 years, line one, the first yellow line, revenues went from 26.6 billion to the current 32 billion. So really, really slow growth. The second yellow line earnings, okay, earnings have expanded from 5.6 to the current eight. The number of shares have been down because of the strong repurchases, which is good. And the free cash flow is stable from 4 billion to 5 billion. Remember, 83, 88 billion market capitalization as the market is volatile these days. You never know what's the market capitalization when the video comes out, but that's a really good cash flow return of what? 7%. Now, as the company is maturing, we can expect to grow in line with global GDP and inflation, perhaps 4%. And that's good, good dividend, great products, price earnings ratio close to 20 at peak earnings and cycle. So that's the current situation. And we have to see now, what are the market worries? Why is the stock down? Well, the stock is down because of slower organic growth, maturity issue, weakness in automotive, China, now global, as we have the coronavirus. And then there are environmental health issues with PFAS, I don't know how to pronounce that, as the market expects that 3M might have to pay up to 10 billion in costs, but that after litigation might be lower. The key with 3M, it is a great business and it will remain a great business. It spends more than 6% of its sales on research and development, which puts it in a top global range. It has great advantages, it has a strong brand. So when you see a brand, you are willing to pay more for that. It has 118,000 patents out there and those patents can be spread across various different industries that 3M is working in. So we can say that it has a large mode because you cannot compete with them with the quality with all the business relationship that it has made. And it really, really goes into detail with each customer to provide the correct solution for the customer. And that's a market you can't just enter because the company has been working for decades on those relationships. And therefore, we can say that 3M has a mode. And the mode can be seen and is reflected in the gross margin, which is close to 50%, which means the company has great operating income, great earnings, no matter the economy, a little bit lower in the down cycle, but it keeps making money, it keeps printing money thanks to the quality of the business. And it's likely to continue to produce good returns for decades. Now the key is, okay, it all boils down to valuation and what you are willing to pay. Here I have taken some earnings reports from previous annual reports from 2004, 2001. And you can see, okay, 2001 earnings were down. And then as the economy improves, earnings immediately shoot up. The last 10 years have been pretty good. And even in the 2009 recession, the stock wasn't hit that much. Okay, revenues went down, but earnings didn't fall that much, which means really the company has a mode, it has cyclical and non-cyclical businesses, which gives it an advantage and really a great business categorization. Now, if I take, let's say, conservative 3% growth long-term, payout 73% of the earnings, it's okay-ish, it would be better if lower, but okay, 3% growth, 10 years, earnings are likely to be 10, 10.75 over the next 10 years, 20 price earnings ratio is 20. That's a good business, good dividend, and you have to see how that fits your portfolio and how much are you willing to pay for it? 50 billion, 83 billion, 120 billion, depending on the market capitalization. Let's go through some examples. 4% growth in earnings, 5% current yield on price earnings ratio of 20. The return from investing will be 9%. That's a great return if the market cap is 88 billion. On a 60 billion market cap, if this opportunity, this virus opportunity lowers the stock, we have a 7.5% return from earnings, add 4% growth, and you have a nice 11.5% return. If we go to 120 billion market cap, we have a 3.75 earnings yield, 4% growth, and you are at 7.75. However, this is still good and the market might see it as amazing given that the 10 year bond is now below 1%. So 7% is amazing and that has been the case also when the market pushed the market capitalization of the company to above 150 billion. And when the situation stabilizes in a few years, and if interest rates are still low, 150 billion would still be a bargain and that's a double of your money which you can take advantage of. But it can also go lower. However, the great business provides a margin of safety and what to do? Perhaps you say, okay, I'll start a position if it goes down, I buy more. If it goes up, when the market is crazy about it, I simply sell and you have here a company that you can invest in and sleep. Well, that's the main message when it comes to 3M. Great business, it's all about the valuation and so it's about you. You have to compare the valuation, the business. It's pretty much one of the easiest forecasts when it comes to earnings modeling, when it comes to growth and stability, margin of safety. It's just about how much are you willing to pay for this company compared to other opportunities that you have out there. What would be your strategy? The goal is not that you buy the best stock out there. The goal is that you reach your financial goals over the next decade, 20, 30 years. When you find something that will most likely lead you to there with low risk, that's the thing you have to buy. Not risk it on crazy things. Thank you for watching. If you like this analysis, subscribe and click that notification bell and I'll see you in the next video.