Televisions are just one part of the electronics sales that will be strong this Christmas, Wal-Mart said during the conference call for its blowout third quarter. If the retail giant is moving a lot of TVs, there’s a good chance it’s moving a lot of Corning, too.
No, Corning isn’t the obvious play here, but it’s the better one as far as Cramer is concerned. There are too many television manufacturers in the LCD space, driving down prices. So the better strategy, he said, is to go with the company that makes the glass for those coveted screens. That’s Corning.
And according to the company’s president and chief operating officer, Peter Volanakis, 2008 should see a “tight LCD glass supply-and-demand situation.” This is the biggest part of Corning’s business, and that should equal strong pricing for the company next year.
Corning's also a play on its new bendable fiber-optic cable, a new technology in the industry that makes wiring buildings much easier, and the Federal Communications Commission ruling that bans cable companies from making exclusive carrier deals with apartment buildings. That opens the door for competition from telcos like Verizon. The resultant business should create demand for a lot more of Corning's cable.
And the stock is cheap, trading at 15 times next year’s earnings with a long-term growth rate of 17%. When the current enthusiasm in the market dries up like Cramer thinks it will, Corning should stand out, he said.
Jim's charitable trust owns Corning.
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