3 Reasons Corning Incorporated's Stock Could Rise

Forget the naysayers. Here are three reasons Corning stock could rise from here.

Aug 28, 2014 at 2:30PM
Corning stock

Source: Corning.

With shares of Corning Incorporated (NYSE:GLW) down 6% since the company announced earnings last month, investors can't help but wonder if this is the right time to buy. To be sure, Corning undoubtedly still has challenges to overcome. At the same time, however, there's plenty to like about the glass maker right now.

There are no guarantees in the fast-changing world of tech, but here are three reasons Corning's stock could rise from here.

Consumers are buying larger TVs
Corning's single biggest segment is Display Technologies, which drove $1.1 billion in revenue last quarter, or 43% of all sales. That most notably includes sales of LCD glass, the price for which has steadily fallen over the past several quarters. However, those price declines have slowed considerably, prompting Corning management to say they're "delighted" with the LCD glass market.

But moderating price declines aren't the only reason Corning is happy. According to Corning CFO Jim Flaws, increased affordability also means the "trend of consumers buying larger televisions has continued." As a result, Flaws says, Corning now sees average screen sizes increasing 3% through 2015, with "robust [...] growth beyond 2015 driven by ultra high definition television penetration, which favors large sized televisions."

That growth isn't exactly overwhelming, but over the long term, it represents a predictable, profitable stream of business for Corning.

Gorilla Glass is still (almost) everywhere
At the same time, many investors are concerned about the future of Corning's Specialty Materials segment, especially given persistent rumors that Apple (NASDAQ:AAPL) -- on Corning's overall results -- might soon replace Gorilla Glass with ultra-durable sapphire in its upcoming iPhone 6.

Corning stock

Gorilla Glass has been featured in 2.7 billion devices so far. Source: Corning.

However, as detailed here, a loss of the iPhone will not be devastating to Corning and they have publicly stated that they still expects new model launches to drive Specialty Materials sales up 10% year over year in the current quarter. As of two weeks ago, that also includes a new Gorilla Glass 3 deal with entry-level device specialist Micromax, which is India's second-largest smartphone brand. As it stands, Gorilla Glass has been featured in 33 major brands, 2450 product models, and 2.7 billion devices.

What's more, it's evident Corning has no intention to let one of its most promising future growth drivers languish: As Flaws confirmed last month, Corning plans "to introduce a new, enhanced generation of [...] Gorilla Glass later this year." When that happens, it'll no doubt complicate any plans for Corning's current customers trying to justify the switch to another device cover.

Corning is "built for longevity"
Finally, remember Corning was founded in 1851, and it arguably knows better than any other company how to survive and thrive in continuously changing technology environments. Corning CEO Wendell Weeks, for example, is often maligned on Wall Street for stubbornly refusing to manage the company around quarterly results. 

He also reminded investors of this during Corning's last annual meeting in April, when he said, "This company is built for longevity. [...] Our products and markets have changed many times over the years, but our innovations share fundamental ingredients: a really tough problem; a combination of materials and process innovation; and a solution that makes a real difference in people's lives."

In fact, that decidedly Foolish mindset was exactly why I singled out Corning in early 2013 as a stock investors could comfortably own for the next five decades if they so chose. Corning stock has risen nearly 70% since then, but it still trades at a modest 17 times trailing-12-month earnings, and less than 13 times next year's estimates. In the end, for patient investors with a long-term time horizon, I'm still convinced Corning stock is a compelling buy.

Leaked: Apple's next smart device (warning, it may shock you)
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Steve Symington owns shares of Apple. The Motley Fool recommends Apple and Corning. The Motley Fool owns shares of Apple and Corning. 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.

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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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