With shares of Corning Inc. (NYSE:GLW) trading at around $12.22, is GLW an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Corning has underperformed the market for quite a while now, but it’s different from most other underperformers. Put simply, riskier bets are paying off at the moment. When there are so many parabolic stocks out there, Corning doesn’t look like the most attractive option. However, many of these companies are fueling growth with debt, and many others are extremely expensive from a valuation standpoint. In the end, these stocks will come back down from the stratosphere. Corning, on the other hand, will continue to hang around, waiting for its time to shine once again. This doesn’t mean the company would be safe from a steep market correction, but it would be safer than the types of stocks mentioned above. And due to its cash-rich nature, you wouldn’t have to worry about anything catastrophic. Experienced investors could also use a drop in the stock price as an opportunity for dollar-cost averaging. This reduces risks and makes the timing of the investment less important.
As far as a catalyst for growth goes, the biggest is Gorilla Glass, which is strong, scratch-resistant and thin glass. Corning saw $1 billion in sales for Gorilla Glass in 2012. Gorilla Glass is used in LCD TVs, computer monitors, smartphones, tablets and touch notebooks. Gorilla Glass is likely to continue to be a major boon for Corning, having earned the trust of big-ticket customers like Apple (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN). Therefore, these companies aren’t likely to look elsewhere at any point in the near future. Regarding Apple, there is also the iWatch situation — the tech company is likely to use Corning’s bendable Willow Glass for this product. However, the iWatch’s popularity potential is questionable. The most important factor is that Corning has a strong hold on the mobile market, and it’s not going to let go. There are some potential threats, but none of these threats are significant…