Is Corning a Triple Play?
Web Editor, "Mad Money"
Right now, Corning has three great businesses – two you probably know, and one you might not. The company is beating low-cost overseas producers of liquid-crystal displays with its own product, and it’s manufacturing the fiber that Verizon loves so much as it tries to build out a better network. But Corning has reinvented itself again and is now in the energy filtration business, which Cramer says could end up being a bigger savior than ethanol for American energy independence.
Corning has announced the expansion of its filter plant in China, which might have to do with it picking up Kia as a customer of its Duratrap filters for clean diesel. It also counts Cummins and Detroit Diesel as clients. Those two companies also buy the Duratraps, but purchase Celcor substrates for emission control from Corning as well. Revenues from this division only account for 4% of Corning’s business, but there’s potential for growth here, Cramer says.
But the heart of GLW is its LCDs and fiber. Cramer thinks the pricing for LCDs is stabilizing, and Corning’s new pricing strategy and cost reductions are helping margins. Not to mention, LCD glass supply is looking tight going into the second half of the year, and that means more stability, if not higher prices.
According to Cramer, the fiber business is so good that Corning has decided to open up part of a dormant fiber plant to meet demand. He says that it could take as much as six to nine months to get that plant up and running, so the company must be confident the market for fiber will hold out. Cramer is, too. In fact, Cramer’s pretty confident that telecom spending will continue and LCD glass prices will stay level at least – something other analysts disagree with – and Corning’s diesel business should crack the 10% of sales mark.
Bottom Line: You thought Corning was firing on two cylinders, but you were wrong – it’s firing on three. That’s why Cramer’s recommending GLW.
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