Keep an eye on Corning

The glass maker recently increased its dividend by 50% -- a sign it expects long-term improvement in its business.

By Jim J. Jubak Nov 30, 2011 5:02PM
Image: Watching television (© image100/Corbis)When I last visited Corning (GLW) on Oct. 14 I said that the stock, then trading at $13.49, was cheap enough to buy but might get even cheaper. (Corning is a member of my long-term Jubak Picks 50 portfolio.)

Well, it has. The stock was trading Wednesday afternoon at $13.21. And it might be headed even lower.

Tuesday morning at a Credit Suisse conference, the company announced the bad news that everybody was more than half expecting from the LCD glass business.

In the fourth quarter, Corning expects LCD glass volume to climb just 5% to 10% from the third quarter versus its original guidance of 20% volume growth.

The lower volumes are a result of lower retail sales of LCD televisions, higher glass inventories at manufacturers, and smaller orders. In October, U.S. retail sales of LCD TVs grew by just 4% -- down from 13% growth in September.

With lower demand comes lower prices. Prices will fall more than the company had previously
expected, and that will take earnings down 30% versus the original guidance for a 5% decline.

Corning isn’t thinking that this will be a momentary blip either. The company said it was taking
action in the current quarter to reduce its glass capacity.

But do remember that Corning recently increased its dividend by 50% so the company doesn’t
think this slowdown will last forever either. (For more on dividend stocks and big dividend
increases, see my post.)

I think the 11% drop of the last day and a half could be extended a bit. The company doesn’t report fourth-quarter earnings until Jan. 25 and until it does report, the fear of an earnings miss will hang over the stock. The bottom of the 52-week range is $11.51 and I wouldn’t mind picking shares up near there. I’m going to add the stock to my watch list while I wait.

Jim JubakAt the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did not own shares in Corning as of the end of September. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 

Tags: GLW
1Comment
Nov 30, 2011 11:16PM
avatar

 

Oops.  My bad.  Forget about shorting Airbus as I recommended on Cramer's blog.

 

Can you pick up some Boeing shares on after hours trading at a reasonable price?

 

Log on tomorrow in the a.m.  Yep, you won't believe it.  No, settle down, Boeing has not hired Elvira as their spokeswoman, but it will be close.

 

Oh yeah, Corning. I used to own a Corning coffee pot.  Vampire bat

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

108
108 rated 1
257
257 rated 2
439
439 rated 3
626
626 rated 4
499
499 rated 5
530
530 rated 6
713
713 rated 7
522
522 rated 8
339
339 rated 9
136
136 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.