Is 3M the Next General Electric?

Is 3M the Next General Electric?

3M Company (MMM) shares fell more than 2% on Tuesday after a downgrade by RBC Capital Markets, and the component of the Dow Jones Industrial Average (DJIA) is testing June’s three-year low at $159.32. The stock has been losing ground since January 2018, dropping the industrial giant into the 29th slot in Dow relative strength, just above Walgreens Boots Alliance, Inc. (WBA). That laggard replaced General Electric Company (GE) on the average in 2018, putting 3M in the hot seat if the Dow’s keepers need to add a new stock.

The performance of 3M is closely levered to the world economy, exposing the company to the impact of trade wars at the same time that it’s managing all sorts of profitable and unprofitable divisions, segments, and business plans. Ominously, this is one reason why GE went into a near death spiral in 2017. 3M is also exposed to unquantified risk from the chemical soup of polyfluoroalkyl (PFAS) ground water contamination, which has sparked a nationwide wave of litigation.

MMM Long-Term Chart (1991 – 2019)

MMM Short-Term Chart (2016 – 2019)

The Bottom Line

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