I bought shares of Cisco Systems (CSCO) for Jubak’s Picks on September 25 because, among other reasons, the company has a history of buying promising new technologies and then using its huge market clout to grow them. It’s about as close to a venture capital fund as you can buy on the stock market.
Buying Corning will give your portfolio a similar new technology boost—with one difference: The new technologies you get from buying Corning were invented there. This company is one of the most prolific research and development operations in U.S. business. And unlike some companies that are good at inventing things but never manage to get them to market, Corning has been able to turn everything from fiber optic cable to ceramic dinnerware to glass for displays and LCDs into major—and profitable businesses. In many of these areas, LCD glass, for example, moreover Corning isn’t just a major player but the dominant company in the sector. The new technologies that Corning is set to roll out (or even better that it is now rolling out) make up a long list: Gorilla glass, green lasers, Jade, and Epic. See the company’s web site at corning.com for more detail on these.)
The most exciting of these to me right now is Gorilla Glass, a specialized glass for touch screen products, including smart phones, now in use in 30 products. Gorilla glass carries a higher margin than Corning’s other display glasses. More sales of Gorilla Glass have a big effect on the company’s profitability.
Corning is relatively cheap now because of continuing doubts about sales of fiber optic cable and about selling prices for LCD glass. The company has recently told Wall Street that demand picked up in the fiber optic business in September after a slowdown in August and demand for LCD glass is holding strong and that anticipated declines in average selling prices in the fourth quarter could be offset by new sales of more profitable thin-form LCD LED TVs.
As of October 12, I’m adding shares of Corning to Jubak’s Picks with a target price of $19 a share by June 2010.
Full disclosure: I own shares of Corning in my personal portfolio.
Jim, I sold this today with a 24% gain due to having set a sell order when I bought using the $19 target. Do you intend to sell yours?
Thank you for this pick!
I don’t disagree with the assessment that the market is overvalued right now and due for a correction. Just two things that I’d add, overvalued markets can become even more over-valued before they correct. And more importantly, I don’t think any correction will be deep or very long. Just take a scan through the comments on my buys recently. All of the ones that say they disagree with my buys are taliking abouit getting back in after the 5% to 10% correction. My read is that there’s an awful lot of money out there thinking the same way and that will make any dip extremely hard to catch. The danger to my mind isn’t a short 5% to 10% dip in 2009 but a steeper drop in 2010-2011 when/if the economy doesn’t turn up at all or at least not as strongly as everyone is now hoping for.
Agree with you jrb..
I am also keeping powder dry and selling stocks I purchased during the last turmoil along this bull run.
We are entering the time of the year when markets tend to be strong but how strong after 60% gains in six months?
From my point… I am keeping charts of Jim picks under review and I am ready to buy as the stocks may reach important supports in an eventual correction….
Jim thanks for your deep insights….
GLW is going to benefit from the internet upgrade. Verizon uses their technology and will likely help keep this stock here if we see a correction.
I have been a student of Technicial Analysis for less than 1 year. This is what I see in Corning by my charts.
XLF, IWM, and SPY are at the top of the charts, and the candles are turing flat. Volume is dropping off. That means that fewer and fewer traders want these stocks. These are what Technicians call indicator stocks, when they go up, the market goes up, as does your stock.
SMH are the Technology stocks, SMH has some room to the upside. But it will have to fight the market to keep going up.
Corning, is reflecting the attitude of the overall market, it has come off a nice base ( the 50 day ) and it is now moving into resistance at around 15.70, and it may well break it, however there is more resistance just above that at around 16.25, and ….. volume is dropping off.
The weekly chart shows some upside momentum, but even the weekly chart shows a huge drop in volume compaired to last week, and it’s candle has gone flat, and it sure looks to me like the big money players are getting out, not getting in.
Ok the long and the short:
Is Corning a good trade? No.
Is corning a good investment? No, not right now.
Corning is likely a very fine stock, but right now, it is about to be pushed down by the overall stock market.
I am just a student of TA, so don’t take my word for it.
A correction is probably coming eventually, but the market might be up another 10-15% or more before it happens. if you keep waiting for the correction, you may end up missing out on good gains.
Jim,
Something I am confused about. I think, and I think even you think this, unless I’ve missed an update in one of your posts, that the market is overvalued right now and is due for a correction at some point, something along the lines of 5-10%. If that’s the case, isn’t it wiser to wait for that correction, and then scoop up the last 4-5 stock picks you’ve had for an even better price? After all, with a major correction like that (assuming you still believe one is due), most stock prices will fall regardless of the health of their underlying businesses. So, isn’t it smarter to wait a few months for the inevitable stock market correction? Does anyone else have any thoughts on this? Thanks, Jay