The latest slogan from 3M (MMM) is “Transforming new ideas into thousands of ingenious products.” Being an innovation leader requires that you recognize problems and find solutions for them. That’s exactly what 3M excels at.
In June, 3M CEO Inge Thulin told CNBC, “I believe that what is driving this company in terms of return for us is the investment in research and development, and every time we do it we know that we have a competitive advantage.” He’s increasing the company’s R&D budget from 5% of revenue to 6%. That’s a major increase, and one that will put 3M ahead of the curve, and competitors.
To measure R&D success, 3M uses its New Product Vitality Index (NPVI). That’s the percentage of revenue generated from products developed in the last five years. The index is at 34% right now and Thulin expects it to reach 40% by 2017. Shares of 3M are trading near all-time highs. Don’t let inertia stop you from buying shares today: it’s our #1 stock.