A Pair of Top Conglomerates for Investors: MMM and UTX

When the going gets tough, the tough go large.

That seems to be the case in the debate over whether small cap growth companies or more established, blue chip, mega cap corporations with global economic exposure are the best investments for active investors and long term traders right now.

On the one hand, we have the traditional contrarian take that sees growth stocks as undervalued in a climate of financial panic and pessimism. It is this view that for the past few months has embraced investment in technology stocks, especially semiconductor and telecommunications equipment-related stocks. Many of these stocks performed particularly well in this spring, no doubt encouraging further investment in these areas.

On the other hand is the thinking of investors like Ken Fisher who have suggested early and often that we are entering an era in which the largest cap stocks - both here in the United States and abroad - are likely to outperform the average stock, including the growth names. Like larger, heavier, sturdier ships at sea, these mega cap stocks are believed by some to be much more capable of withstanding the volatility that has characterized stocks since October 2007. These mega cap stocks also tend to provide attractive dividends, making them additionally attractive as investments in a world where low interest rates are still widespread.

Today I wanted to take a look at two such mega cap stocks: 3M Company (MMM@MMM | Quote | Chart | News | PowerRating) and United Technologies (UTX@UTX | Quote | Chart | News | PowerRating). These two stocks, both of which have high Long Term PowerRatings and come from an industry with a top Industry PowerRating, are examples of the sort of stock more and more investors are turning toward as uncertainty over the fate of stocks grows.

3M Company represents the true definition of a conglomerate, with a diverse array of interests in businesses ranging from healthcare, graphics and design, communications, safety and security services and more. 3M Company has a P/E of 13.40 and provides a dividend yield of 2.90.

3M, which has a Long Term PowerRating of 8, last reported quarterly earnings in late April, beating analyst's estimates by three cents. It was the company's fourth consecutive earnings beat. 3M is next scheduled to report earnings on July 24th before the market opens. Analysts from First Call are anticipating EPS of 1.35.

The other conglomerate I wanted to underscore here was United Technologies. United Technologies also has a Long Term PowerRating of 8, putting UTX in that category of stock that, according to our research, have been higher one year later more than 74% of the time. 8-rated stocks such as UTX - and MMM - have also tended to gain more than 17% in a year's time, based on the same research.

United Technologies operates in a number of fields from building systems to aerospace and creates products from air conditioners and aircraft engines to elevators and power fuel cells. UTX last reported earnings in mid-April, beating estimates by four cents, in what was the company's eight consecutive earnings upside surprise. United Technologies has a P/E of 13.50 and has a dividend yield of 2.10. The company next reports earnings on July 17th, with analysts from First Call expecting earnings per share of 1.30.

Looking for more long-term solutions to your investing problems? Don't let the volatility of this market lead you to miss out on stocks you'll be glad to have bought a year from now.

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David Penn is Senior Editor at PowerRatings.net.