The stock of 3M Company (NYSE: MMM), which manufactures about 55,000 products, including abrasives, adhesives, car-care products, and laminates, hit a new 12-month high of $246 last week. The company reported a higher-than-expected 3Q17 earnings of $2.21 per share on revenues of $8.172 billion. 3M is also expected to grow at a rate of 11.4% this year, much higher than the industry’s expected growth of 7.8%. All these factors keep the stock bullish. We anticipate the stock to move up further in the week ahead due to the facts presented below.
3M has launched a new home air filter named the Filtrete Smart Air Filter. It is the industry’s first Bluetooth-enabled HVAC (heating, ventilation, and cooling) home filter. The Filtrete division is focused on the development of products that improve air quality indoors. Usually, Filtrete filters have a life period of about three months. The filter will lose its effectiveness, if left unchanged. However, it is difficult to determine the exact expiry period of a filter because each home is different. The new product from Filtrete is designed to get rid of the guess work.
The new filter has several unique features such as Bluetooth-enabled pressure sensor and Smart App that will alert the users when it is time to replace the filter. The Bluetooth facility enables users to monitor the performance of the filter through their iOS or Android mobile devices. Therefore, there will not be any need to compulsorily change the filter at the end of three months. Instead, usage and airflow in the home will determine the longevity.
When it is time to change the filter, the smart application will suggest the size and type of filter to purchase, and the online retailers who sell them. Even information about outdoor air quality is made available. The indoor air quality data will also be provided, if a separate air quality monitor is used.
The company is planning to begin marketing Filtrete Smart Air Filters from spring 2018. 3M continues to lay stress on organic growth by investing in infrastructure and marketing capability. The company is able to successfully innovate products which can result in up-cycle market share gains. Therefore, investment in R&D, business transformation, and strong portfolio management is expected to keep the stock bullish in the short-term.
Technically, the stock is trading above its 50-day moving average. Both the MACD and money flow index indicator is rising. Thus, we can expect the stock to rally further.
To gain from the current uptrend, we are looking at the possibility of purchasing a call option, which is valid for a period of one week. We may buy the option from a binary broker only if the stock is trading at about $245 in the NYSE.
Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.