3M (NYSE:MMM) has quickly become another “blood in the street” opportunity.
After plummeting from a high of $180 a share to a low of $144.44, the stock offers sizable opportunity.
For one, 3M is aggressively oversold at double bottom support dating back to Oct. 2020. Two, President Donald Trump is about to light a fire under the stock.
At the moment, I strongly believe MMM stock could refill its bearish gap around $180 shortly.
Coronavirus Creating Monster Opportunity for 3M
Just this week, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Disease, as quoted by The New York Post, said the coronavirus has risen to a level of “outbreak,” even a “pandemic.”
“We’re dealing with clearly an emerging infectious disease that is now reached outbreak proportions and likely pandemic proportions,” said Dr. Fauci. “If you look at, you know, by multiple definitions of what a pandemic is, the fact is this is multiple sustained transmissions of a highly infectious agent in multiple regions of the globe.”
Of course, news like this only induces panic. However, for investors, it also creates opportunity.
Trump Could Send $1 Billion in Sales to 3M
It creates big opportunity, which is especially true for face mask companies after the U.S. Health and Human Services says the U.S. only has 10% of face masks needed for a full-blown virus pandemic. They estimate the U.S. would need at least 3.5 billion medical-grade N95 masks.
Better, the Trump Administration has plans to source millions of masks from 3M to help combat the virus threat. If so, that could generate up to $1 billion in sales for the company. Vice President Mike Pence said in a press conference:
We’re going to make sure and protect the health of our healthcare providers. As the President said, we have more than 40 million masks available today. We’ve contracted now with 3M. Thirty-five million more masks per month will be produced, and we’re also going to be working with other manufacturers.
For 3M, it’s not all about face masks, though. It’s also ramping up global production for respirators and other safety products, “as quickly as possible,” noted the company. “In China and around the world, 3M is working with customers, distributors, government and medical officials to help get supplies where they are most needed. 3M is also closely monitoring and responding to any potential impact.”
Granted, 3M isn’t the only game in town. Alpha Pro Tech (NYSE:APT) has also benefited from the demand for face masks. With regards to 3M, though, “The simple reality is that 3M is one of only a handful of S&P names that sells a necessary product in virus containment,” according to a Melius Research report. “This is being ignored by the market.”
Melius Research also upgraded the stock to a “buy” from a “hold” rating.
The Bottom Line on 3M Stock
The biggest catalyst for 3M is the coronavirus story.
With the virus spreading rapidly throughout the global community and a severe shortage of face masks, 3M could be one of the biggest beneficiary of the demand boom. Currently at double bottom support, I strongly believe 3M will refill its gap at $180 shortly.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
