Technology Made in the USA
10/12/2009 2:25 pm EST
I bought shares of Cisco Systems (Nasdaq: CSCO) for Jubak’s Picks on September 25 because, among other reasons, the company has a history of buying promising new technologies and then using its huge market clout to grow them. It’s about as close to a venture capital fund as you can buy on the stock market.
Buying Corning (NYSE: GLW) will give your portfolio a similar new technology boost—with one difference: The new technologies you get from buying Corning were invented there.
This company is one of the most prolific research and development operations in US business. And unlike some companies that are good at inventing things but never manage to get them to market, Corning has been able to turn everything from fiber optic cable to ceramic dinnerware to glass for displays and LCDs into major and profitable businesses.
Moreover, in many of these areas—LCD glass, for example—Corning isn’t just a major player, but the dominant company in the sector. The new technologies that Corning is set to roll out (or, even better, that it is now rolling out) comprise a long list: Gorilla Glass, green lasers, Jade, and Epic. (See www.corning.com for more details on these.)
The most exciting of these to me right now is Gorilla Glass, a specialized glass for touch-screen products, including smart phones, now used in 30 products. Gorilla Glass has a higher margin than Corning’s other display glasses. More sales of Gorilla Glass will thus have a big impact on the company’s profitability.
Corning is relatively cheap now because of continuing doubts about sales of fiber optic cable and selling prices for LCD glass. The company has recently told Wall Street that demand picked up in the fiber optic business in September after a slowdown in August and that demand for LCD glass is holding strong, while anticipated declines in average selling prices in the fourth quarter could be offset by new sales of more profitable thin-form LCD LED TVs.
As of October 12, I’m adding shares of Corning to Jubak’s Picks with a target price of $19 a share by June 2010. (It traded below $16 Monday.)
Full disclosure: I own shares of Corning in my personal portfolio.