Investors can very easily get caught up in quarterly
earnings reports, rejoicing when their stocks report good results and second-guessing their picks when things go awry. It's important to remember, though, that investing is a long-term endeavor and that quarterly outcomes are far less important than how a stock performs for longer periods -- several years, five years, a decade... and beyond.
Companies that persevere and nicely reward shareholders for many decades are known at StreetAuthority as "Forever Stocks." Sure, these stocks may have their ups and downs, but in my experience, Forever Stocks are usually worth holding, well, forever.
3M Co. (NYSE: MMM) is one of my favorite Forever Stocks.
You know 3M, the $61 billion diversified industrial firm that was founded in 1902 and is now famous for its innovations such as Post-It Notes and Scotch Tape. The company's product portfolio includes a wide range of other items, from liquid crystal display (LCD) films, car care products and dental equipment, to adhesives, shampoo and sandpaper.
The firm did have some setbacks in the fourth quarter of 2011, particularly in its display and graphics business, where sales fell 9% from $904 million in 2010 to $823 million. The electro and communications segment did poorly, too, as shown by a 3% decline in revenue from $792 million seen in 2010 to $768 million. Earnings per share (EPS) for 2011 came in at $5.96, a mere 3.7% increase from EPS of $5.75 in the previous year.
But it's important for investors to put such short-term disappointments out of their minds and focus on what makes 3M a Forever Stock. First of all, there's long-term performance. The stock returned 457% during the past 25 years, which translates to a solid 7% a year.