Fiber Optic Favorite

04/09/2004 12:00 am EST

Focus:

John Mugarian has a conservative, fundamental approach to stock selection, while Jim Collins uses a more aggressive, momentum-based quantitative style. Despite the differing investment philosophies, both cite Corning as new buy recommendations. Here are their reviews.

(For more information on the advisors cited below, click on their photos.)

Collins, JimCorning (GLW NYSE) is the latest featured analyst's review from Listed Insight. Says editor Jim Collins , "Corning produces optical fiber and cable and networking devices for the worldwide telecom industry. Its primary products also include liquid-crystal display glass for flat-panel displays. It is introducing production of larger sheets of glass, which are more efficient for display manufacturers to use and command higher prices. The company expects LCD glass revenues to grow close to 50% in 2004, driven by growth in notebook computers, desktops, and LCD TV markets. The firm’s other primary market is environmental technologies, which include ceramic substrates used in catalytic converters. Corning has No. 1 worldwide market share in ceramic inserts. More stringent diesel engine emissions regulations ahead will help drive future sales growth. The tougher standards will have a meaningful impact in Europe, where diesel autos are significantly more popular than in the US. In February, the company announced NexCor, a new optical fiber for converged voice, video, and data service networks (known as ‘triple play’ networks). For the quarter ended Dec. 2003, Corning reported earnings of $0.04 a share, which was $0.14 better than the loss of $0.10 a share reported in the year-ago quarter. Revenues increased 11%. The shares have performed strongly after bottoming at $5.42 in April 2003. The stock has since traded sharply higher following several strong earnings reports. The company has an ‘A’ rating for accumulation and distribution."

Mugarian, JohnAdds John Mugarian, editor of Investor Alert, "While I am cautious and waiting for a pullback before adding to new positions, there are always stocks that are so undervalued that no pullback is required before we snatch them up. These kinds of stocks are a contrarian investor's dream. And one I've got my eye on right now is Corning. While most investors are waiting for the recovery in telecom before investing in Corning, the company just happens to be at the right place at the right time. Recognizing the changes in technology, Corning is slowly moving out of the conventional TV business and is shifting toward flat-panel screens. In addition, the company is in a 50% joint venture with Samsung-Corning Precision Glass, a business that has been booming for over a year. And there’s another reason that investors are missing the boat. While the flat-panel business is what's driving Corning 's earnings now, fiber optics is on the comeback trail too. The company just signed a major deal with Verizon to begin expanding the company's fiber optics network. A pickup in the economy will attract more customers to DSL, and as demand increases, other telecoms will be scrambling to expand their networks as well. Thus, Corning will not only benefit from the flat-panel craze, but also the next wave of telecommunications build-out. Apparently, I'm not the only one who agrees Corning 's future is bright. Recently, company director Eugene Sit bought 25,000 shares at $12.56 a share. Back in 2001, the stock traded as high as $69. With everything looking up, I consider this stock an immediate buy for aggressive investors."

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