Is This Corning Director Telling You to Buy?

Famed money manager Peter Lynch told us executives can sell their stock for any reason, but typically buy only for one: They think the price is going to go up!

Today I'm highlighting glass panel maker Corning (NYSE: GLW  ) , which saw one of its directors recently buy more than $1.8 million worth of stock. Now this wasn't an option grant, either, but purchases made on the open market just as you or I would do. Is it a sign he thinks Corning is ready for a big jump higher?

Corning snapshot

Market Cap

$18.5 billion

Revenues (TTM)

$7.8 billion

1-Year Stock Return

7.3%

Return on Investment

7.2%

Estimated 5-Year EPS Growth

10%

Dividend and Yield

$0.36/2.9%

Insider

Gordon Gund, director 

Total Purchased

$1.82 million

Average Purchase Price

$10.76

Recent Price

$12.54

CAPS Rating (out of 5)

*****

Source: FinViz.com.

Although following the lead of insiders can be profitable, I still recommend you do further due diligence to determine whether this stock would make a good addition to your own portfolio. So this isn't a call to buy, but just the inside track on a company you might want to check out further.

Funhouse mirrors
Maybe Corning's executives were looking at their sales projections in the mirror. Previously they were counting on LCD glass volumes to fall somewhere in the range of a mid-single-digit decline while sales for the solar-grade polysilicon they produce with Dow Chemical (NYSE: DOW  ) were expected to increase 25%. Yet when they updated their outlook a few weeks ago, they said that rather than seeing LCD glass volumes falling, they were actually going to the mid-single digits and polysilicon sales were actually going to fall 20%. Huh?

Bigger is better
Despite a global collapse of TV shipments, which fell 7% in the third quarter, NPD DisplaySearch says third-quarter sales in North America and China remain robust in the third quarter to reverse declines seen over the first six months of the year. Domestic shipments were up 3%, while the Orient Express roared ahead 13%, but it wasn't enough to offset the virtual elimination of sales in Japan -- they fell 70% year over year (did everyone just stop buying TVs there?) -- while Western Europe shipments were down 15%.

When people are buying TVs, they want them big. Real big. Sales of sets 50 inches and larger grew 24%, the first time growth exceeded 20%, while those smaller than 50 inches grew 30% -- well below the previous 40% to 50% sales growth levels.

Monkeying around
LCD sales are such an important component of Corning's business because it comprises 37% of revenues and 86% of its profits. But the more exciting story is its specialty materials division that houses Gorilla Glass, the tough-as-nails glass used for screens on smartphones and tablet computers. It comprised only 18% of revenues and 11% of net income in the third quarter, but that's up from 14% and 5%, respectively, a year ago.

Apple's (NASDAQ: AAPL  ) iPhone and iPad carry Gorilla Glass, as does Google's (NASDAQ: GOOGL  ) Nexus line of devices and Nokia's (NYSE: NOK  ) popular Lumia line of smartphones. With the new Lumia 920 making quite a splash for Nokia, analysts expect the new partnership with China Mobile   (NYSE: CHL  ) to help boost sales as much as 25% to 50% next year.

Corning forecasts that Gorilla Glass will surpass $1 billion in sales this year, with fourth-quarter revenues expected to jump 60%. Between specialty materials and LCD sales rising higher, Corning's Gordon Gund may just be right to signal there's more growth ahead for the glassmaker's stock. I've already rated Corning to outperform the broad indexes on CAPS, but tell me in the comments box below whether you agree this is a crystal clear opportunity to buy.

On the inside track
With the explosive growth of smartphones worldwide, many investors thought they would ride Corning's dominant cover glass to massive investment returns. That hasn't played out yet, as mobile growth has failed to offset declines in the company's core business. In this brand-new premium research report on Corning, our analyst walks through the business, as well as the key opportunities and risks facing it today. Click here to claim your copy, and receive a full year of updates as key events unfold.


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