Stock to Buy on Weakness: Corning

UPDATE -- Last week Corning Incorporated (NYSE:GLW) shares fell 10% in one day, taking over $1 from its share price.  GLW closed Friday at $12.62 a shares and Mastery loves the pullback.  Thanks to the retreat Corning now pays out a 2.3% annual dividend yield.  Corning shares are trading near the low of their 12 month range of $11.51 to $23.43.

What makes Corning so great is its traditional product lines and its rising star -- Gorilla Glass. 
 

Gorilla Glass is in everything from cell phones to televisions. The glass was used on some 200 million phones last year and is on over 500 million devices.

This year, Gorilla Glass sales could reach $1 billion — almost one-sixth of Corning's total sales last year (source: npr.org).

Barclay's believes Corning shares could hit $17 in the next 12 months. Buying GLW today could bank a 31% return if Barclay's is correct.  The firm believes the potential for normalization in glass shipments with LCD TV demand coupled with near trough valuation levels, a share buyback program and an improving cash generation profile.  All of this makes Corning (GLW) a buy recommendation by Barclays.

Corning was killed today (Jan 25th) after the company posted a 53% drop in Q4 profit and said it is scaling back production of liquid-crystal-display glass because lackluster demand for LCD televisions has led to a steep drop in glass prices.

Chief Financial Officer Jim Flaws insisted hat producing LCD glass remains “extraordinarily profitable.”  The world’s largest maker of LCD glass, Corning said it has had to cut its prices in recent months because Asian panel makers have excess supplies.  Corning hopes that by lowering its output it will help glass supplies “become balanced with glass demand at some point during the year,” Flaws told analysts during a conference call.

MASTERY Bottom line:

Mastery believes the story, should we get lucky shares will continue to fall. GLW is a Buy at its current level.

We like the stock in the low $13 range.

With GLW trading near $12.60, we say Buy.