Sell Stock of the Month: 3M Co (MMM)

Written by Donnie Nguyen

January 11, 2021

WHY I’M SELLING 3M COMPANY

I’ve decided to remove 3M Company (NYSE: MMM) from the stock of the month. This has been one of my worst picks. The stock has been flat from my pick price of $166.76 in September of 2019. And it lost to the S&P 500 by 27.91% over the same timeframe, not counting dividends.

I still love 3M’s products. I regularly use Scotch tape and Filtrete filters at home. And the stock is still well off its high of $259.77 set in 2018, which makes the stock seem like a bargain. 3M is still a dividend aristocrat and could be poised to turn around once the great re-opening happens. The global health crisis most certainly was not good for the business. But the vaccine could be a huge catalyst for 3M stock.

However, there’s a lot of uncertainty around the legal issues that 3M has with its involvement with PFAS. Some say that they may be forced to pay penalties that could be in the billions of dollars.

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Another less-talked-about threat is a disruption to their core businesses from other innovative companies. For example, Elon Musk mentioned in one of Tesla’s (NASDAQ: TSLA) quarterly conference calls that he could get into the HVAC business. I believe that this would be a direct hit to 3M’s Filtrete business. If so, that could just be the start of an insidious disruption to 3M’s core businesses. You never want to see Tesla as a competitor.

As much as I’d love to see 3M Company grow and prosper, I think that there are too many potential landmines on the horizon. It appears to me that 3M stock could be a value trap.

So what do you think about 3M stock? Leave me a comment below. Thanks for reading!

Stats (as of 1/8/2021)

  • Pick Price: $166.76
  • Closing Price: $166.62
  • Performance: -0.08%
  • Performance vs S&P 500: -27.91%

DISCLOSURE

I/we am long TSLA

Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies discussed in this article.

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Want to learn the principles that help me to consistently beat the market? Check out my free eBook, 5 Things I Wish I Knew Before Buying My First Stock.

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Donnie Nguyen

Donnie Nguyen

Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.

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