Mad Money

Cramer: We blew it on 3M, but it’s too late to sell

Key Points
  • A number of factors, including fears of a trade war, have dragged down 3M's stocks, "Mad Money" host Jim Cramer explains.
  • However, the stock now is "just too cheap," he says.
  • The rebound could be terrific when the company gets its act together, he says.
Too late to sell 3M

3M has seen a "monster" decline from its January highs and at this point it is too cheap to sell, CNBC's Jim Cramer said on Thursday.

In fact, the "Mad Money" host said, "We blew it ... I got it wrong, bought it too early for the charitable trust at the end of February ... before we found out that [CEO] Inge Thulin was retiring and that the business turned soft the next month."

The multinational giant, which makes thousands of products including Scotch tape and Post-It notes, is down almost 24 percent from its peak in January.

A number of factors contributed to the decline, including the announcement that Thulin would be stepping down in July. Its last quarter was also widely considered a disappointment.

Exterior of the Dutch head office of international technology company 3M in Delft, Netherlands.
Koen van Weel | AFP | Getty Images

Meanwhile, fears over a trade war also weighed on 3M, which gets less than 40 percent of its sales from the U.S.

On Thursday concerns over trade were renewed after the Trump administration announced tariffs on steel and aluminum imports from Canada, Mexico and the European Union would take effect at midnight. U.S. allies quickly fired back with retaliatory actions.

Still, Cramer believes 3M's move down has been "really excessive" and believes the stock is "just so cheap."

"Look, 3M is a very well-run company that's been doing a great job of improving itself," Cramer said.

For those who think the global economy is going to suffer because of trade problems or those who think the recent softness in a few of 3M's business lines will spread to other parts of the company, he could understand hating the stock if it was trading between $220 and $250.

On Thursday, shares of 3M closed down 1.45 points at $197.34.

At these levels, the stock is selling for 17 times next year's earnings estimates, which is roughly in-line with other large-cap, diversified industrials, Cramer pointed out.

However, 3M has more exposure to safer, less cyclical industries like health care and is a better-run company than almost all the others that sell at similar multiples, he added.

"If you do believe that the last quarter was a temporary blip, then the rebound could be terrific when 3M gets its act together," he said. "But even if you want to dump the stock, I believe you'll get a better chance to sell no matter what."

3M did not immediately respond to CNBC's request for comment.

Disclosure: Cramer's charitable trust owns shares of 3M.

Cramer: We blew it on 3M, but it’s too late to sell

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