3M Doing The Right Things And Still Leveraged To Cyclical Recovery

Stephen Simpson 20.97K Followers Follow Summary 3M's core industrial business is benefiting from a strengthening short-cycle recovery, while 30%-40% of end-markets remain weak, notably consumer electronics and auto. An expanding manufacturing recovery could drive beat-and-raise quarters, and management has been restrained on pricing while still generating operating margin leverage. Opportunities like data center EBO interconnects and a fire safety JV look like low-risk, good-return investments, but 3M still lacks leverage to more dynamic secular trends like automation and electrification. The investment thesis has some nuance—the near-term valuation upside isn't spectacular (maybe 10%), but MMM's execution is improving, and beat-and-raise quarters can drive a higher fair value. JHVEPhoto/iStock Editorial via Getty Images New management and a new focus on core internal strengths like material science have done many good things for 3M ( MMM ), taking the shares up about 150% off their multiyear low in the fall This article was written by Stephen Simpson 20.97K Followers Follow Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds). Analyst’s Disclosure: I/we have a beneficial long position in the shares of MMM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.