Tuesday, November 17, 2015

3M Is A Wonderful Company But Not A Buy Here


The economy is on stable ground but is far from growing by leaps and bounds. Even worse the volatility in the stock markets are playing with investors minds. Back in August and September the stock markets declined significantly, but shot up 10% in October alone to continue higher. Recently the markets have been seeing red with a potential increase in interest rates on the horizon. The uncertainty of the Federal Reserves' actions are whipsawing the markets which makes me want to add to some of the highest quality companies out there.

I consider 3M Company (NYSE:MMM) to be one of those high quality companies and the 57 year streak of growing dividends seems to back that up. The breadth and diversity of their products smoothes out operations. When one segment suffers the others tend to pick up the slack. That can lead to some amazing long term results for investors. Every $1 invested in 3M Company 30 years ago is worth $36.28 today. That's a 12.7% annualized return.

While I'm glad to call myself an owner of this excellent company that doesn't mean I'm willing to purchase shares at any price. The truest fact with investing is that valuation matters. I wanted to reexamine the future return potential if you purchased shares of 3M Company at current levels to gauge whether it could make for a solid investment.

Continue reading the 3M Company stock analysis on Seeking Alpha.

To see more of my stock analyses check out the Stock Analysis page.

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6 comments:

  1. I completely agree with you... It's a great company, but not a buy at this time.

    ReplyDelete
    Replies
    1. Ben,

      I'd love to add to my current holdings but for now I'll wait until the price comes back down. Eventually it will fall out of favor and a value opportunity will open up.

      Thanks for stopping by!

      Delete
  2. Impressive company, but you are right. This doesn't look like a buy right now. The run up from 2012 is looking pretty overextended.

    -FwF

    ReplyDelete
    Replies
    1. Free Will Finance,

      Excellent company and I have no doubt that they will continue to do well and weather any more economic storms that are sure to come. But I don't see a lot of value here at these price levels.

      Thanks for stopping by!

      Delete
  3. 3M is a great company, but instead of waiting for the right buying opportunity, I bought a smaller semi-competitor in AVY, Avery Dennison, that I'm very happy with.

    ReplyDelete
    Replies
    1. Dividend Meter,

      I've heard of AVY before in passing so maybe it's a company I need to check out more to see what they have going on.

      Thanks for stopping by!

      Delete