Corning and American Airlines: Poised for Equality-Driven Profits

These stocks could help your portfolio take off.

Jul 18, 2014 at 6:33PM

Fiber-optic cable. Credit: Karen, Flickr.

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some companies that champion workplace equality to your portfolio but don't have the time or expertise to hand-pick a few, the ALPS Workplace Equality Portfolio ETF (NYSEMKT: EQLT) could save you a lot of trouble. Instead of trying to figure out which stocks will perform best, you can use this exchange-traded fund to invest in lots of equality-minded companies simultaneously.

Why this ETF, and why workplace equality?
This ETF focuses on companies that support lesbian, gay, bisexual, and transgender (LGBT) equality in the workplace by tracking the Workplace Equality Index, which includes companies that score 100% on the Human Rights Campaign's Corporate Equality Index. This ETF offers more than just some warm and fuzzies: the Workplace Equality Index has handily outperformed the S&P 500 over the past three, five, and 10 years -- though the ETF itself is still very young.

The ETF sports an expense ratio, or annual fee, of 0.75% -- well below the typical mutual fund's fees. It's small, because it's so new, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

A closer look at some components
On your own you might not have selected Corning Incorporated (NYSE:GLW) or American Airlines Group Inc (NASDAQ:AAL) as equality-minded companies for your portfolio, but this ETF included them among its 160-plus holdings.

Corning Incorporated
Glass specialist Corning is well known for its tough Gorilla Glass, installed in more than 2 billion devices across some 500 product lines. Many are worried that Apple (NASDAQ:AAPL) will abandon Gorilla Glass in favor of stronger sapphire glass for its new iPhone 6, but Gorilla Glass isn't the company's main revenue-driver. (The glass is still likely to find a home in other smartphones, and perhaps also in lower-cost Apple phones.)

More important to Corning are bigger display panels, such as in big-screen TVs. After all, a 60-inch screen uses far more glass than a 6-inch phone. The rise of phablets and larger-screen smartphones, along with ever-growing TV screens, also bodes well for Corning. Management expects high-definition sets to drive greater TV sales in coming years. In the company's last quarter, revenue popped 26% year over year, while EPS grew 7%. Total LCD glass volume grew by low single digits year over year, and the company expected that to rise to high single digits in the next quarter.

Meanwhile, Corning isn't standing still. Its stronger, thinner Willow Glass, for example, can be curved and could prove useful to the solar energy industry, among others. It also has a new Lotus Glass for use in LCD and organic light-emitting diode displays. Corning is expanding the use of Gorilla Glass into the automotive and architectural markets and has a deal with Intel (NASDAQ:INTC) to make ultrafast fiber-optic cables.

Corning's dividend yield of 1.2% is appealing, especially since it has doubled in just three years. With its P/E ratio near 18 -- well above its five-year average of 11 -- Corning stock isn't a compelling buy at the moment. Interested investors might want to keep an eye out for pullbacks or add it to their watchlists.

American Airlines Group
The airline industry has long been a tough one for investors, but American Airlines Group, the result of a recent merger between American Airlines and US Airways, has more than doubled over the past year. It's the world's largest airline, with "nearly 6,700 flights per day to 339 destinations in 54 countries."

The airline has benefited from (and participated in) consolidation in the industry, which reduces competition and allows greater pricing power. Its revenue and profit margins have been growing, and while its bottom line is in the red, operating income is increasing, and net losses have been shrinking. Part of the problem is that American Airlines sports more than $15 billion in debt, which presents a headwind. The company spent more than $3 billion on debt repayments last year.

There's reason to be hopeful, though, as passenger revenue per available seat mile was up a solid 6% year over year in June, and management is forecasting double-digit profit margins. Increased efficiency, coupled with pricing power and ever-increasing fees, can do a lot for the bottom line -- American reportedly took in more than $2 billion in fees in 2013.

The stock's price-to-sales ratio is a low 0.4, making the stock rather attractive. Be vigilant if you buy, though, as American Airlines still faces the usual challenges (empty seats, bad weather, etc.) as well as meaningful competition -- which is seeing an opportunity as the major airlines focus on capacity discipline instead of capacity expansion.

Top dividend stocks for the next decade
If you're waiting for the right time to buy the stocks above, consider grabbing some significant dividend payers now. Our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, owns shares of Corning, Apple, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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