MMM Stock: Enamoured With This Name
I have encountered few companies that I trust as much as 3M Co (NYSE:MMM). It makes top-notch products and is ever pushing the envelope in using the latest technologies to improve its vast product line, and the ways in which the products can be used. We all have come across their products, and some we use on a daily basis. MMM stock should be a welcome addition to an investment portfolio, the same way the company’s products are welcome additions to one’s life.
3M is a diversified technology company, and its product catalog includes healthcare, automotive, mining, transportation, and consumer products. I love this company’s products, as they are a welcome addition to making my life a little bit easier: products as simple as the “Post-it” and bandages to more complex items such as vinyl wrap used to change the colour of a car. Everything is made with the outmost care and quality. I always assume that if a product alternative exists, I know without a doubt that the 3M product is better, and I have yet to prove myself wrong. 3M’s trademark slogan “science applied to life” is dead on.
I could go on about how enamored I am with this company, but the stock chart speaks for itself. The following chart illustrates the predominant trend in MMM stock.
Chart courtesy of StockCharts.com
There are two parallel lines that define this trend. The pattern is known as an ascending channel. An ascending channel has two trend lines that define the upper and lower bounds. The share price oscillates between these two lines for as long as the trend permits. A trend reversal occurs when shares finally run their course and break out of the channel.
The longer a trend is in place, the more significant it becomes. I can safely assume that as long as shares continue to trade within the channel, the bull market in MMM stock is sustainable. It is a rare occurrence for MMM stock to touch one of the trend lines that define the channel. When a trend line is hit, that usually signals a trend reversal within the channel.
In January, 3M stock hit the lower trend and subsequently bounced off. The trend that was lower within that channel has ceased, and a trend moving higher has developed. The trend is expected to hit that upper level of resistance. The slope of the resistance line is positive, so the longer it takes to reach the to that upper resistance level, the higher that level becomes.
The short-term setup pattern supports further upside, as the following chart illustrates.
Chart courtesy of StockCharts.com
MMM stock has set up a pennant pattern. Pennants are continuation patterns. On average, the patterns play out as a mid-point consolidation. These patterns are both effective in confirming the trend and providing a price objective. A successful break above $181.00 would provide a price objective of $192.00. An appropriate strategy using options could effectively capture this gain and reduce potential risk.
The path of least resistance is higher and the chart patterns confirm that the uptrend is strong and in full effect.
The Bottom Line on 3M Stock
MMM stock is a large-cap dividend-paying stock. The charts illustrate that the trend in its share price is up, and that trend is set to continue. I like investments in companies that produce products I consume. I am bullish on 3M stock, and I will remain that way until the charts give me a reason to change my view.
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