Corning: Glass Gains Since 1851

06/26/2015 8:00 am EST


Jack Adamo

Editor, Jack Adamo's Insiders Plus

Our latest new recommendation is a company that was founded in 1851 and is a leader in specialty glass and ceramics, explains Jack Adamo, editor of Insiders Plus.

Corning (GLW) makes glass substrates for liquid crystal displays (LCDs) that are used primarily in LCD TVs, notebook computers, and flat panel desktop monitors. Included is Gorilla Glass for smartphones.

It also makes optical fiber and cable, ceramics, and filter products for emissions control. Its specialty materials unit makes approximately 150 formulations for glass, glass ceramics, and fluoride crystals.

The firm's life sciences unit makes laboratory products, such as specialty surfaces and reagents for cell culture research, genomics, and drug discovery. A new anti-bacterial coating looks promising.

Despite the company's high-tech support credentials and a stock that has risen 16-fold since the bottom of the 2000 market crash, the shares are down 15% since February.

Investors are worried that the long boom in LCD TV sales is over and that sales of smartphones and tablet computers will slow, taking company growth with it.

The market is right to be concerned. In fact, from what I hear from tech maven Fred Hickey, the slowdown in phone and tablet sales may be worse than expected. This raises the question, why not wait?

It's a valid question. However, I still think the company will have modest growth through the slow period and the stock is selling for just 12-times trailing GAAP earnings, compared to 27 for the market.

I want to make sure I get a piece of this in case it surprises to the upside. If I'm wrong and we have to wait for performance, the price is still a good one.

Corning hasn't been around for 164 years by being careless. The balance sheet is very solid and the firm's accounting is very clean.  Interest coverage is stellar at more than 13-times operating earnings.

While a growth rate of 6.7% is not Apple-like, Corning's prospects look pretty good, especially when you throw in the 2.3% dividend that has grown 140% in the last five years.

All in all, the stock looks like a very good buy at its current price. Buy Corning up to $21.50. If the stock slides in the next few months, we'll add more. Buy the stock only with a limit order, not a market order.

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