Any more opinions on GLW here? The key is future demand for their products of course. One disconnect here is that the analysts are still forecasting earnings of $.88 this year, $1.00 next year, and a five year earnings growth rate of 25% (Yahoo Research). Based on these numbers GLW looks quite cheap relative to most other stocks, using the after hours price tonight of $15.65/share (Fwd PE = 17.8, PEG of .71 vs. 1.77 for the S&P 500). Even using the ML numbers of $.75 (2001) and $.80 (2002), it looks very cheap, if the 5 year growth rate is 25%. Apparently we were supposed to have bought last fall when it was ok to buy it per the analysts, at maybe $100/share, and should sell now, at what may be the bottom, and maybe end up selling our shares to the firms that have recently downgraded.
This logic does not work for me. Insiders have been buying the stock recently, and at higher prices. In a recent interview, a Corning manager stated he expects the bandwidth market to grow at 100%/year over the next 15 years. Some carriers have stated that data traffic is doubling every 3-4 months. There is the telecom nightmare that GLW has to deal with, and the dark fiber issue, but how long can all this really go on, given the growth in data traffic and the aggressive rate cutting by the Fed? Also there are international sales to countries like China and Russia that should help out. Finally, how could the experts have been so wrong last fall, and yet be so right at this point in time?
I don't know the answers to these questions, I am just trying to start a discussion here. There are lots of pieces of this puzzle to sort out. One thing I don't believe is that the analysts will tell us when it is time to buy. Unless maybe we use them as a contrary indicator. Regarding the forecast of 2 years or so for orders to pick up (ML says it could take 18 mo. now for a solid return on the stock if bought below $20. Assuming the market moves 6 months in advance of orders, I get 2 years.), I find any estimate from the same people who said to buy GLW last fall to be of questionable value. Finally, suppose they are right about the worst-case scenario. At some point it will be all priced into the stock. If "nuclear winter" is priced in at this point, maybe it is time to buy.
I imagine that most people on this thread are much more knowledgeable about this industry than I am. Any comments would be appreciated.
Good luck to all.
John |
