3M Stock: 4 Compelling Reasons to Buy, 1 Big Reason to Pass

April 29, 2025 at 08:00 AM EDT

3M stock price

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From Scotch tape and Ace bandages to Filtrete air filters and Post-It Notes, 3M Co. (NYSE: MMM) products are often taken for granted in everyday life. Yet, when consumers run out of them, that’s when their true value is revealed. The same applies to its stock. The multi-sector conglomerate company posted a solid Q1 2025, proving itself as a reliable asset whose underlying strength is truly revealed when markets face uncertainty.

Unlike the bearish signals from the moving averages on the S&P 500 and Nasdaq-100 benchmark indexes, 3M stock continues to trade above its key moving averages, maintaining the bullish trend that began when the 50-day moving average crossed above the 200-day moving average a year ago.

However, it still comes with formidable risks. Here are four compelling reasons to buy 3M stock and one significant reason to stay out.

1) Organic Growth and Margins Continue to Improve Steadily

In the first quarter of 2025, 3M reported earnings-per-share (EPS) of $1.88, beating consensus estimates by 11 cents. Revenues grew 1.1% year-over-year (YOY) to $5.8 billion, also beating consensus estimates of $5.76 billion. Most notable is the 220 bps growth in its operating margin to 23.5% and its 1.5% organic growth.

The company launched 62 new products in Q1, up 60% YOY. 3M has 215 new products planned to launch throughout 2025 and over 1,000 new products over the next three years. 3M trades at a price-earnings (P/E) ratio of 18.2x, below its average P/E of 21x.

2) Its Diversified Portfolio Helps Buffer From Economic Downturns

3M has a diversified portfolio of over 100,000 products spanning multiple industries, including consumer goods, healthcare, electronics, safety and industrial manufacturing. Having so many products reduces its reliance on any single industry.

During certain economic periods, demand may fall for discretionary products like electronics but increase for staples like Post-it Notes and air filters. 3M's massive portfolio helps it hedge itself by including both more cyclical and stable product lines.

3M stock chart

3) The Bullish Golden Cross Pattern Is Still Intact With Proven Support/Buy Levels

On the technical side, MMM stock triggered a bullish Golden Cross on April 18, 2024, consisting of a 50-day simple moving average (SMA) crossover up through the 200-day SMA.

The market selloff provided a rigorous stress test of the $124.65 level support, which handily deflected the selling at least four times in the past year. In its most recent test heading into Q1 2025 earnings, MMM bounced off $124.65, clear through its 200-day SMA at $134.35.

This is a good pullback level to consider for reentry.

The $112.69 level is its Q4 2024 earnings gap fill upper channel support, and the $105.04 level is the lower gap fill channel support. Both levels are solid buy-the-dip levels to consider on deep pullbacks.

4) A Weaker US Dollar Is Good For International Sales Volumes

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3M collects nearly 45% of its revenue, approximately $4 billion, from overseas.

A strong dollar tends to hurt selling volumes, like most companies that derive significant revenues internationally.

Many companies will provide “constant currency” results to paint a more favorable picture of earnings and revenue, backing out the currency translation headwinds.

In rare instances when the US dollar loses value, US exporter products are cheaper overseas, which causes demand and sales volumes to rise.

The US dollar has fallen even deeper since the end of Q1 2025, which could turn the currency headwind into a tailwind in Q2 2025.

A major reason to stay on the sidelines is:

1) Trade Wars and Tariffs Can Shoot a Hole in Their Operating Profits

3M admits that tariffs will be a headwind in 2025. Tariff impacts would mainly impact its consumer business products division. The word tariff was mentioned 37 times in its Q1 2025 conference call since half its revenues come from overseas. 3M isn’t pausing any shipments currently but has 90 days of inventory, which will run out by the end of June. After that, the impact of tariffs will hit their imports.

Nearly 30% of revenues are derived from the Asia Pacific region, and nearly 10% comes from China.

CFO Anurag Maheshwari provided a little color, “Now, pricing for example, in some cases you can put a surcharge, in some cases you need to come up with a new list price, so we’re working, depending on the situation, keeping in mind that we still--the business is going on as it was.”

Management forecasts call for $25 million to $50 million in company-wide losses. Still, other income of $50 million to $100 million could be offset from property sales, investment gains and legal settlements. This could translate into a 20-cent to 40-cent EPS headwind.

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