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Corning Incorporated (GLW): Look Into These Electronics Companies’ Growth Businesses

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Corning Incorporated (NYSE:GLW)Some of my favorite stocks in the electrical equipment/electronics industry are those of firms that aim to invest resources in growth markets and profit from market trends. These are companies that might have more substantial R&D budgets than the average sector participant, allowing them to alleviate the impact of cyclical downturns while supporting profit gains. The stocks tend to be good long-term holdings, despite the likelihood of increasing demand over time.

New avenues of growth in display glass

Corning Incorporated (NYSE:GLW) has performed well behind the strength of its liquid-crystal-display (LCD), primarily used in televisions and notebook computers. The company is currently benefiting from increasing demand in Asia, as the television industry there continues to transition to newer material and larger display sizes. Corning’s subsidiary, Samsung Corning Precision, is well-situated in this business and is a major contributor to the bottom line.

More importantly, perhaps, in terms of growth prospects beyond the next several years, Corning Incorporated (NYSE:GLW)’s Specialty Materials segment produces a “Gorilla Glass, utilized in small-form factor displays, i.e. smartphones. The profit margins on this operation should expand over several years, while Corning continues to seek out further applications for the material. On that note, the company is consistently developing products within its other divisions. Specifically, its Environmental Technologies unit is developing new diesel engine filter-related products for the purposes of meeting tightened emissions regulations in the U.S. and Europe. Plus, its Telecommunications division is also investing in data center and wireless focused products.

Corning Incorporated (NYSE:GLW) is currently experiencing flat year-over-year volumes in its LCD glass business, a factor that may deter earnings from substantially exceeding last year’s $1.29 mark. Its shares are trading at only about 10.7 times forward earnings, adding to their appeal. My belief is that Corning will remain at the forefront of the display glass market, allowing the company to continue to realize sales gains and strong margins in those businesses.

Automotive audio and navigation products

In early 2014, Harman International Industries Inc./DE/ (NYSE:HAR) will launch in Mercedes Benz vehicles a navigational system with advanced high-definition-display (HDD) and 3D capabilities. The system, the NTG5, will also incorporate wireless and speech-recognition features. Its newest products combine interactive headset displays and smart navigation technologies. Through these developments, it is providing a glimpse of the future in automotive audio and positioning systems.

In the meantime, Harman continues to expand on long-term agreements with auto manufacturers. Its two largest clients are BMW and Audi/Volkswagen, and the company is making strides among Japanese and Chinese producers. Its more moderately-sized consumer-related unit is also reliant on product development, such as new wireless speakers and those for the mobile audio market, as it partners with telecom service providers like Sprint Nextel Corporation (NYSE:S), Verizon Communications Inc. (NYSE:VZ), and AT&T Inc. (NYSE:T).

For the current fiscal year, Harman is up against a challenging environment due to struggles among the European automakers. Still, it is likely to benefit from restructuring measures, and earnings growth should accelerate. It likely earned just over $3.00 per share in the year ended June 2013.

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