Korean screen builder LG Display (LPL -3.10%) is having a rough year. Share prices have plunged 34% lower in 2018 and LG Display missed Wall Street's earnings targets in each of its last four financial reports.

Is this where LG Display finds some traction for a turnaround, or should investors stay far away from this troubled stock?

Let's have a look.

Business cycles

First, it's important to note that this company works in a highly cyclical industry. As demand for smartphones, big-screen TV sets, and other screen-equipped consumer electronics ebbs and flows, so do LG Display's top and bottom lines. And right now that market is going through a secular downturn:

LPL Revenue (TTM) Chart

LPL Revenue (TTM) data by YCharts.

Past performance can't guarantee future returns, of course, but there are some pretty clear patterns going on here. Every other year, LG Display gets to tap into strong smartphone and/or TV markets, and the upcoming holiday season looks like one of the weaker periods. Furthermore, the current batch of flagship smartphones is shaping up to be more of an evolution than a revolution. So device makers are tapping the brakes on their manufacturing plans, leading directly to softer order flows for LG Display.

Smartphones for the win

The key to igniting a serious turnaround in LG Display's business and stock performances lies in boosting those soft economies of scale again. Stalled production volumes can be a real problem in this industry, as ever-lower unit prices meet an immovable wall of fixed production costs. As a result, LG Display's profit margins have been plunging over the last four quarters.

Smartphone screens have been a particularly weak spot in recent quarters, while LG Display found some refuge in modestly higher sales of laptop screens. This Friday, share prices surged as much as 8.6% higher on reports that Apple (AAPL -2.54%) will use LG Display as a second supplier of screens for its newest range of iPhone devices. Mind you, that's simply confirmation of an earlier rumor to the same effect.

That could help LG Display shore up its flagging smartphone orders, assuming that the latest and greatest iPhone models trigger the usual feeding frenzy around every new generation of Apple products.

A big-screen TV set with a curved screen, showing a peaceful vista of mountains and a hot-air balloon.

Image source: Getty Images.

Deep, deep discount prices

This stock is priced for absolute disaster right now. LG Display's stock can be had at the bargain-bin valuation ratios of 0.3 times trailing sales and 0.53 times the company's book value. In other words, investors currently see more value in dismantling the company and sending the resulting cash back to shareholders than in running the actual business.

I find that idea downright ridiculous. The cyclical market will surely turn back upwards again, and it's not like LG Display is on the verge of going out of business. If the smartphone market stays down, the company could run at the current rate of cash burn for two years before being forced to find additional financing.

So if you see smartphones and TV sets staying out of style for at least two more years, I guess you could make a coherent case for LG Display's current valuation. I don't see the weakness lasting that long, which makes me downright excited about LG Display's skimpy valuation.

So yes, I think that LG Display is a buy at these silly share prices. It may be a bumpy ride and the stock could still fall deeper, but market timing was always a difficult game anyway. We're looking at a very reasonable entry point for this stock right now.