Gorilla Glass to Keep Pushing Corning Stock Higher
Today’s stock is a good example of another of my favorite investment strategies: investing in “picks-and-shovels” stocks. The companies that supply products or services that cater to a rising trend have the potential to double—or even triple—their investors’ money in the coming years. Hence, it pays to consider having such stocks in one’s portfolio.
Today’s picks-and-shovels stock is Corning Incorporated (NYSE:GLW), which has unparalleled expertise in specialty glass, optical physics, and ceramics. Its products in display technologies and optical communications are in strong demand, and the future growth trends look promising. The company operates in five business segments: “Display Technologies,” “Optical Communications,” “Environmental Technologies,” “Specialty Materials,” and “Life Sciences.” It develops products at 98 plants across 17 countries.
But the most exciting part of the product portfolio is its “Gorilla Glass,” which is a part of the Specialty Materials business, and is used as a cover glass for mobile phones, tablets etc. The demand for Gorilla Glass is on the rise as more device manufacturers realize its strength and appeal. Corning is the market leader in this specialty glass, which is being used by the likes of Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co Ltd (NASDAQ:SSNLF).
GLW stock is a promising play on the consumer electronics industry, which is teeming with new Gorilla Glass applications. The coming revolution of connected cars in the automotive industry bodes well for the company. The automotive market is full of opportunities for Corning.
“Gorilla Glass for Automotive” has immense potential to enable safer, cleaner, and more connected cars, which is being realized by the leading automakers. Gorilla Glass enables multi-touch response, with a better viewing and improved communication experience for more connected cars. As the trend toward connectivity keeps rising, GLW stands to gain.
According to a report by Allied Market Research, the global connected car market is expected to reach $141.0 billion by 2020, posting a compound annual growth rate (CAGR) of 32.7% during the forecast period of 2014–2020. The growth of this market will be driven by consumers’ rising demands to be connected all the time, and their growing dependence on technology. (Source: “Connected Car Market by Technology, Connectivity Solutions and Applications – Global Opportunity Analysis and Industry Forecast 2013-2020,” Allied Market Research, last accessed August 2, 2017.)
Through its culture of innovation, Corning is likely to gain from this growth as it works on advanced versions of its Gorilla Glass.
Corning also keeps on expanding and developing new markets, as evident from its recent collaboration with Merck & Co., Inc. (NYSE:MRK) and Pfizer Inc. (NYSE:PFE), which has resulted in the introduction of “Corning Valor Glass.” This revolutionary product should provide more reliable access to essential medicines and modernize pharmaceutical glass packaging.
The company announced its second-quarter results last week and reported revenue and profit figures that exceeded expectations. The Specialty Materials division, which includes Gorilla Glass, saw a phenomenal 27% rise, while the Optical Communications division posted a 13% increase.
However, GLW stock got hammered on the outlook for its Display Technologies segment; where the overall LCD glass market and Corning’s volume are likely to grow by low single-digit percentage points, with the company expecting moderate sequential glass price declines, in the range of 10% or less.
GLW stock has gained 22% year-to-date, and about 156% over the last five years. With a string of innovative products and an increasing market for its Gorilla Glass, Corning stock is likely to continue its upward march, following a break.
Chart courtesy of StockCharts.com
The Bottom Line on Corning Stock
Corning is executing its strategy well, and is more confident going into the future, with the majority of its business divisions performing successfully. This picks-and-shovels stock could be a good choice at a time when we are witnessing a proliferation of advanced forms of glass. Given the company’s expertise, it can increase the sales of its glass, and also raise its prices, which would be a further boost to GLW stock.
The company’s innovative products are likely to remain in high demand in the coming years. As signs of weakness appear in the Corning stock price, investors could use this opportunity to their advantage.