Corning: Glass Gains

02/19/2014 7:00 am EST

Focus: STOCKS

Charles Mizrahi

Editor, Park Avenue Investment Club and Inevitable Wealth Portfolio

The latest update for our Prime Time portfolio is a provider of high-performance glass for LCD televisions, computer monitors, and other information display applications, notes Charles Mizrahi, editor of Hidden Values Alert.

We like the diversification behind Corning (GLW). The company gets 36% of its revenues from Display technologies, 27% from Telecommunications, 12% from Environmental Technology, 17% from Specialty Materials (tablets/mobiles phones), and 8% from Life Sciences.

This diversification reduces the company's exposure to a specific industry, smoothing out potential bumps in the road to a particular segment.

GLW spent more than $700 million on R&D in the past 12 months (about 9% of revenue). The company continues to find applications for its glass technology.

The company can employ its proprietary technology in growth drivers such as the smartwatch and smart television markets, as well as windshields or marker boards.

GLW has more than $10.6 billion of cash and investments on its balance sheet. The company has very little short-term debt ($23 million).

It generated $1.5 billion in free cash flow in the past 12 months, allowing management to engage in shareholder-friendly capital allocation practices.

The company pays a $0.40 annual dividend, which amounts to a dividend yield of 2.33%. Additionally, management has allocated $1.5 billion to its share buyback program over the past two years. This has reduced shares outstanding by nearly 8% during the same time period.

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