Is 3M Stock a Safe Bet for Your Portfolio?

MMM announces expansion of boron nitride cooling fillers line

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3M Company (NYSE:MMM) is an American multinational conglomerate corporation. With operations in more than 70 countries, MMM is involved in the fields of industry, worker safety, US health care, and consumer goods. 3M Company also produce over 60,000 products under several brands, including Ace, Post-it, Scotch, Nexcare, Filtrete, Command, and FUTURO. 3M Company products include adhesives, abrasives, laminates, passive fire protection, personal protective equipment, window films, paint protection films, dental and orthodontic products, electrical and electronic connecting and insulating materials, medical products, car-care products, electronic circuits, healthcare software and optical films. This afternoon, MMM was last seen trading up 1% at $184.10.

On Sept. 9, 3M Company announced plans for an expanded line of boron nitride cooling fillers, applicable to a wide array of automotive, electrical, and electronic devices and components. The new grades from 3M are Boron Nitride Cooling Filler Agglomerates CFA 100 & Boron Nitride Cooling Filler Agglomerates CFA 150.

Subsequently, during a Morgan Stanley investment conference on Monday, Monish Patolawala, 3M Company CFO, noted inflation concerns in raw materials, labor, and logistics that are outstripping price increases over the current quarter. According to Patolawala, “My belief, and I may be wrong, is until we see a demand-supply parity somewhere, I think [we’re] going to continue to see inflation in raw material and in logistics."

3M stock has increased 8% in price year-over-year and MMM is up 17% since bottoming at a nearly seven-year low of $156.13 in late October. Shares of MMM have grown 6% year-to-date, but 3M stock is currently down 11% from its 52-week high of $208.95 reached in May. 3M company also offers a forward dividend of $5.92 and a dividend yield of 3.20%.

With a massive market cap of $105 billion and a business model that encompasses various essential industries, 3M stock still offers very little risk as a short and long-term investment despite inflation woes. 3M stock’s price-earnings ratio of 18.04 also presents a fair value for the conglomerate. However, MMM has a forward price-earnings ratio of 17.21, indicating little growth potential. Overall, 3M stock is best suited for dividend investors looking for a solid dividend yield and minimal volatility.

There looks to be plenty of room for upgrades moving forward. This is per the 80% of covering analysts that sport tepid "hold," "sell," or "strong sell" ratings on the equity. 

Now could be a good time to weigh in on MMM with options, too. The stock is seeing attractively priced premiums at the moment, per the security's Schaeffer's Volatility Index (SVI) of 22%, which sits in the 32nd percentile of its annual range. 

 

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