|
|
|
|
After a Recent Run, Shares of Corning (GLW) Still
Offer Great Value |
Published:
October 18,
2007
Corning (NYSE: GLW, $25.46) is a 150-year-old company that
is involved in some of today's most exciting cutting-edge
technologies.
In the 1870s, the company developed the glass used in Thomas
Edison's first light bulb. Around the time of World War I, it
engineered "PYREX" -- a highly durable brand of heat-resistant
cookware. And in later years, it was instrumental in
advancements like the television cathode ray tube (CRT) and even
designed the surface of the Hubbell telescope.
Today, Corning is best known for the glass substrates used to
make liquid crystal displays (LCD). In fact, the company
dominates 50% of the global market for the thin glass panels
used in computer monitors and televisions. While this division
represents almost half of the firm's revenues, Corning does have
a stake in a number of other fast-growing fields as well.
In fact, the company is actively involved in four broad lines of
business that encompass areas such as fiber optics, diesel
engine pollution control, and scientific laboratory instruments.
And through its 50% ownership stake in Dow Corning, the firm
boasts more than 7,000 silicone-based products that run the
gamut from fuel additives to solar power cells. In short,
Corning's products have hundreds of applications and are used in
everything from astronomy to aerospace defense.
Though the company struggled mightily after the tech bubble
popped several years ago, it has since mounted a powerful
comeback and strengthened its balance sheet. In fact, Corning
now sports $1.7 billion in cash (net of debt) on the books. And
while its business is somewhat capital intensive, the company
still generated in excess of $600 million in free cash flow last
year.
As a result, management has had the confidence to reinstate its
quarterly dividend payments (which were discontinued in 2001)
and is also diligently buying back shares. And looking ahead, we
see further good news on the horizon.
Thanks in part to the proliferation of high-definition (HD)
televisions, management is forecasting volume growth of up to
+40% in the global LCD market this year. Furthermore, stricter
government emission standards should help fuel widespread
adoption of the firm's diesel engine products.
And on the telecom front, Corning's bendable fiber (which can be
bent around corners with no signal loss) is expected to be a
"game changing" breakthrough -- opening up high-speed voice,
Internet, and HDTV to millions of residences around the world.
Already, key service providers like Verizon (NYSE: VZ) have
expressed interest.
Despite rallying +40% so far this year, GLW is still
trading at a reasonable price-to-earnings-to-growth (PEG) ratio
of about 1.0. And based on our fair value calculation of $32, the
stock has the potential to gain about +26%. Given the explosive
growth expected in some of its core markets, it wouldn't
surprise us to see the shares march even higher.Good investing!
|
Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
|
| To receive
in-depth guidance on today's leading value opportunities every other weekend, plus educational guidance, please subscribe to
Nathan Slaughter & Paul Tracy's premium value investing newsletter --
Half-Priced
Stocks |
|
|
|
Income Security
of the Month
Our "Income Security of the Month" for August 2008 invests in a
fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of
25.5% per year over the past five years -- this fund is perhaps
most appealing for its total return potential. Specifically, the
fund has delivered total returns of +178.9% since 2003,
and it ranks in the top 10% of its category over the past decade.
|
Top
10 Stocks for 2008!
Since we began publishing this report back in 2003, the picks we've
featured have consistently beaten the broader market -- delivering average
gains of +21.3% per year and outperforming the S&P by a nearly
2-to-1 margin. Act now to reserve your copy of our newest report -- Top
Ten Stocks for 2008. |
|
|
