If you've been reading my blog, or even are a subscriber to my Strategic Advantage service, then you know that I like turnaround stories. I like companies that have been beaten down -- ones that investors have turned their backs on. Why do I like these companies? Because they have a lot of potential to bounce back, surprise people and make investors who believe in their story a lot of money.

One such company is 3M Company (MMM). This famous maker of Post-It notes and Scotch tape looks ready to break out of the funk that it's been in since former CEO Jim McNerney decided to jump ship and take the captain's chair over at Boeing (BA) back in 2005.

During his four-year tenure at 3M, McNerney scaled back capital spending and research and development efforts to help boost profitability. McNerney's efforts helped push 3M's operating margins and returns on capital north of 20%, which are sector leading levels. But with the company's famously innovative research team stifled by the cut back in research and development, 3M is now challenged with capacity constraints and a weak product pipeline. So, to support revenue growth in the high single digits, 3M needs to start spending again.

Early indications by the new management team, led by CEO George Buckley, have been positive. 3M has started to reverse the slide in capital expenditures with some big time physical investments in new factories overseas. From a low of $677 million earlier this decade, capital spending is expected to ring in near $1.5 billion this year. This cash is buying some 19 plants around the world, including four in China, one in India and one in Russia.

The positioning is strategic, because as the U.S. economy continues to slow, emerging markets will continue at breakneck growth rates. More than 60% of the company's $24 billion in revenue will be generated internationally this year. Last year, 3M's Chinese revenues came in near one billion dollars, and they are currently growing at 30% a year. Over in India, revenues are growing 40% annually.

Other reasons why the stock is attractive:

• Innovative new products like Vikuiti (optical film used on LCD screens to boost contrast and enhance color)) brought to life in 3M's research labs by an army of PhDs.


• Acquisitions to expand the company's exposure into different businesses. For example, the $1.4 billion acquisition of CUNO in 2005, gave it exposure to the water and filtration business.


• A $7 billion two-year stock buy back program.

There's nothing like a good turnaround story. And I expect 3M's shares to trade at higher levels, especially as we move into the latter portion of this bull market. Historically, large, high-quality, multi-industry companies, like 3M, perform very well as investors begin moving out of more cyclical holdings.