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Strategies & Market Trends : Fundamental Value Investing

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From: E_K_S	7/16/2012 7:51:15 PM
	6 Recommendations of 4719

For consideration I would like to propose GLW as a value stock for SI Buffet stock challenge. GLW sells at a 67% discount to it's Graham Number fair value of $20.25/share Corning Inc. (GLW) -NYSE - Current price $12.25/share Corning Inc. plays into my digital data "theme" as two of their operating divisions (1) Display Technologies and (2) Telecommunications benefit from the explosion of mobile computer devises and the proliferation of digital data. The company sell 9% BELOW it's TBV of $13.44/share and has a current PE of 7.64. The company's debt profile beat Buffets conservative rule of annual net income 4x (or less) than total Long Term Debt. GLW is at the low end of that measure at 1.43x Annual Net Income = LT Debt. Furthermore GLW has been aggressively buying back shares. As of December 31, 2011 the company bought back 55,453,748 shares or about 4% of their outstanding shares. The company will buy back $1.5B (almost 7% of outstanding share) buy Dec 2013. Their Telecommunication business segment continues to grow fast (over 20% YoY) with Sales of fiber-to-the-premises products increased 39%, driven by initiatives in Canada, Europe and Australia. More importantly, their profit margins are excellent w/ higher margin products when compared to their LCD panel margins. Specialty Materials: Corning's Gorilla Glass. Sales in this division have almost doubled in 2011 compared with 2010 $1,074M). The margin for this glass is much higher than w/ their panels and with smart phones and tablets sales should double again. Environmental Sciences: YoY sales $998M vs $816M generated from Automotive & Diesel filters. That reflects a 22% sales growth rate. Life Sciences: YoY sales $595M vs $508 reflecting an 18% increase. Book Value has increased every year for the last 5 years. The company has maintained their net profit margin fairly well (a 35% avg) w/ the mixture of their product mix and has shown a ROA over the last 5 year in the low teens. With a forward PE of 8 and selling below it's TBV, their collection of assets to me are selling at a fireside sales price. Reviewing this stock over again, I did not realize how profitable (and sizable) their telecommunication side of their business was. Everybody focus on their LCD business. GLW is a bargain at current levels and should make a fine SI candidate stock. It's also one of my top 10 holdings in my portfolio(s) which reminds me, I should make another add at the current level. EKS

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