You don’t have to worry about long-term earnings trends too much with Corning. Management is highly strategic, and they seem to take a long-term approach opposed to pleasing investors right now and then having trouble down the road. Corning consistently delivers profits, and it even delivered strong profits during the difficult years of 2008 and 2009. Other examples of strong management include a profit margin of 22.11% and a debt-to-equity ratio of 0.14. The former indicates efficiency, and the latter demonstrates quality debt management. Yet another bonus is that Corning yields 2.80%.
Applied Materials, Inc. (NASDAQ:AMAT) is similar in size and business model, but the fundamentals aren’t as strong. Ironically, Applied Materials has outperformed Corning over the past several years. Part of this outperformance was justifiable, considering Applied Materials enjoyed two years of significant revenue and earnings improvements prior to 2012. However, both revenue and earnings declined in 2012. Additionally, Applied Materials, Inc. (NASDAQ:AMAT) sports a profit margin of -5.20%, which either indicates subpar efficiency (can relate to management) or industry weakness. Despite Applied Management demonstrating quality debt management and yielding 2.60%, it doesn’t look to be as strong, or as safe, of a long-term play as Corning.
LG Display Co Ltd. (ADR) (NYSE:LPL) had suffered revenue and earnings declines in 2011, but it bounced right back in both areas in 2012. Earnings have been inconsistent over the years, but the overall trend has been up since 2008. LG sports a profit margin of just 1.22%, and it doesn’t offer any yield, but as long as it maintains a relationship with Apple, upside potential exists.
Conclusion
Corning Incorporated (NYSE:GLW) and LG both have significant upside potential moving forward. If LG’s curved glass proves to be a hit, it will open many doors. If Corning’s investment in Dynamic Glass proves successful, then imagine the demand potential if it hit the mainstream and most builders wanted to use it.
If you’re worried about the stock market being overvalued, then consider investing a small amount in the company you believe in most and adding to that position in small increments if the stock suffers. If the stock appreciates, then you have a small win.
Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Corning. The Motley Fool owns shares of Corning. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article This Tech Stock Has Big Potential originally appeared on Fool.com and is written by Dan Moskowitz.
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