Since I have modest expectations for the overall stock market in 2020, I will be satisfied with a stock that delivers a solid double-digit total return (capital appreciation plus dividends), suggests Jim Pearce, editor of Investing Daily's Personal Finance.
At the same time, I would prefer a stock that increases steadily in value throughout the year instead of one that gyrates wildly. I would also like a company with strong business partners that sells a product currently in high demand.
For those reasons, I have chosen Corning (GLW) as my one growth stock to own in 2020. The company formerly known as Corning Glassware was founded in 1851 as a maker of industrial grade glass. Since then it has evolved into a quasi-tech company given the level of sophistication in many of its products.
Corning is poised to capitalize from increased 5G spending no matter which direction it goes. Last October, the company announced a strategic collaboration with Intel (INTC) to provide 5G infrastructure in commercial office buildings using a type of high-speed fiber optic material manufactured by Corning.
In addition to Intel, Corning has a strong corporate partner in Apple (AAPL). In September, Apple made a $250 million investment from its Advanced Manufacturing Fund to Corning for glass used in the iPhone, Apple Watch, and iPad. That amount is on top of a $200 million infusion Apple made last year to Corning.
The upshot of all those developments is that Corning should post sales results next year that catch the stock market by surprise. I believe the trading algorithms that extrapolate recent results into the future are underestimating how quickly Corning will be able to grow earnings over the next several quarters.
Corning is valued at 15 times forward earnings compared to a multiple of 19 for the S&P 500 Index. However, I suspect the company is lowballing its earnings guidance for 2020 to keep expectations modest, so a more accurate forward price-to-earnings ratio may be closer to 13.
If my hunch proves correct, I expect GLW to rise back up to $34 by the end of next year. Combined with its 2.8% dividend yield, that works out to a total return of 20%, which should make Corning a market-beating growth stock in 2020.
