3M (NYSE: MMM) is off to a spectacular start to 2025, with its shares climbing 18% in January following its fourth-quarter earnings report that exceeded Wall Street estimates.
The industrial giant may have finally turned the page compared to a difficult post-pandemic period, marked by supply chain disruptions and inflationary cost pressures. A return to positive growth and climbing profitability bodes well for the company's long-term future. On the other hand, with the stock price up 91% in the past year, investors may wonder if the rally can continue, or has this turnaround opportunity already passed?
Let's discuss what to do with shares of 3M now.
With a history spanning 123 years, 3M is credited with countless inventions in materials science and specialty chemicals. The company's extensive brand portfolio featuring names like Scotch Tape, Nexcare, Post-it, and Bondo covering industrial and consumer applications is globally recognized for its high quality. That diversified profile and sector leadership make 3M a compelling investment that is well positioned for long-term success.
2024 marked a milestone year for the company, completing a landmark restructuring that saw it spin off its healthcare segment into Solventum (NYSE: SOLV) as an independently traded company. The effort to streamline the corporate structure to focus on core strengths and unlock shareholder value appears to be paying off, with the latest results highlighted by a resurgence of operating and financial momentum.
In the fourth quarter (for the period ended Dec. 31), organic growth rose 2.1% year over year, notably reversing the 1.4% decline in the prior-year quarter. Management cited strong performance in the transportation and electronics segment, where recent product launches have gained market traction. Within the safety and industrial group, broad strength across business groups reflected the resilient macroeconomic environment. For the full year, adjusted earnings per share (EPS) climbed by 21% alongside accelerating free cash flow.
In 2024, 3M resolved two major legal matters by reaching settlements over defective combat earplugs and per- and polyfluoroalkyl substances (PFAS) water contamination claims. While the company has agreed to pay billions in damages over the coming decade, these agreements have cleared significant uncertainty from its outlook.
Management is projecting optimism for 2025, targeting organic sales growth between 2% and 3% alongside a 4.1% to 8.2% increase in adjusted EPS. Ultimately, investors who are confident that 3M's comeback story is just getting started have plenty of reasons to buy and hold the stock.