3M's buying opportunity has passed due to rich valuation ($180 vs $147 fair value); suitable for long-term holding but low priority for new buys.

3M entered a strategic data center partnership with Microsoft to deploy its patented expanded beam optical technology in data centers. The technology reduces circuit installation time by 85% and of course anything related to data centers is booming.

That being said, it's important for investors not to get too excited about this because it's still a relatively small part of 3M's business. Even based on the strong first half performance for 3M in 2026, the management team is forecasting revenue growth organic revenue growth of greater than 3 and 1/2%

So this is an a boot business that's booming right now. But does the new partnership and organic sales growth in the low to mid single digits make 3M an attractive relatively safe buying opportunity for dividend stock investors?

So 3M is one of those large conglomerates that generates volatile sales figures because of divestitures and acquisitions and mergers. And you see that here in the company's results sales falling from $35 billion all the way down to $25 billion as a result of a divestiture.

Sales are growing again as I mentioned 3 and 1/2% at least expected for 2026. Longer term, investors would be happy with 3M if they reported mid single digit revenue growth for a five or 10 year period.

That means four or five or six percent revenue growth over that time period with its historic levels of operating leverage that generates earnings per share growth almost two two and a half times its revenue growth, meaning that earnings per share will likely come in at 10, 11, 12, maybe 13% growth on revenue growth of just 4, 5, or 6%.

So, that kind of formula is very, very good for long-term shareholder value growth if it's consistent and longer term. Historically, 3M generates an operating profit margin around 20%.

There's been volatility surrounding this metric, but if we exclude that noise around 2024 with the divestiture, and we focus more on its longer-term average, investors would be reasonably confident that the company can generate operating profit margins around 20%.

So, again, if we're talking about 3, 4, or 5, 6% revenue growth combined with 20, 21, 22, maybe as high as 25% operating profit margins, that's a formula for success.

3M is having a relatively successful year so far. It's up over 12.4% plus dividends, so investors are happy with this kind of rate of return with a business with this level of risk.

I ranked 3M stock as a buying opportunity, and I last updated that ranking on April 13th, 2026. The performance of the stock is actually much better than the full year 2026. If you just look at since the last time I ranked it as a buying opportunity on April 13th, it was trading around $148 per share, and it's increased to $180 per share.

So, meaningful share price improvement since the last time I ranked the stock as a buy. So, that's also coincided in an increase in the valuation of the business. When looking at it on a forward price to earnings basis, it's now trading at 18.4.

This is the most expensive this stock has been going back several years.

Similarly, I updated my discounted cash flow valuation for the company today, and my calculation arrived at a fair value of $147 per share.

Compared to the current market price of 180, it looks richly valued. And I get the same answer whether I'm looking at the forward price to earnings ratio or whether I'm looking at my discounted cash flow valuation, they all point to a stock that's slightly overvalued or moderately modestly overvalued.

And so, I think the buying opportunity for 3M stock is over, right? I think the beginning parts of the year, when the share price was dipping, was a great time to accumulate shares of 3M.

Now, I think it's a good holding opportunity. If you keep the stock for the next 10, 20 years, I think the market price will be meaningfully higher than where it is today.

However, if I'm thinking about that next incremental investment, that next stock to buy, I'm not thinking about 3M anywhere near the top half of my list of stocks that I would be interested in buying compared to the market price and current fair value estimates.