PPG Industries, Inc. (NYSE:PPG) provides protective coatings, including those in the glass industry. The chemical company has managed to be up 50% year-to-date on the back of solid M&A activity. PPG is the richest of the stocks listed at 23x forward earnings and 15x cash flow, but only offers investors mediocre growth at a 10% 5-year expected EPS CAGR. We like PPG’s diversity in the chemical industry, but would rather have Corning’s more concentrated exposure in the tech market. PPG calls billionaire Jim Simons as one of its big-name investors (see all of Jim Simons’ top picks).
TE Connectivity Ltd. (NYSE:TEL), meanwhile, is a touch screen manufacturer that is up nearly 20% year-to-date on rising demand for touch screen technologies. The stock has solid growth in line with the other screen technology companies at a 10% long-term EPS CAGR. Next to Corning, TE is one of the cheapest in the industry at an 11x forward P/E and 9x cash flow. TE should be able to grow its business in a similar manner as Corning, thanks to robust demand for mobile devices. Ken Griffin – founder of Citadel Investment Group – is one of TE’s biggest supporters (check out Ken Griffin’s latest picks).
3M Co (NYSE:MMM) is a diversified tech company with exposure to healthcare, transportation, office, display and much more, and is up 12% since the start of the year. The tech company recently acquired Ceradyne, which will give 3M a better footing in industries that require ceramics. 3M does trade in the mid-range of the industry at 15x earnings, but has one of the stronger gross profit margins (50%) and balance sheets (18% debt ratio) out there. Given its diverse product base, 0.9 beta, and 2.5% dividend yield, 3M is a solid large-cap bet that has the potential to grow.
Becton, Dickinson and Co. (NYSE:BDX) has the lowest expected growth of the five stocks listed, with only a 7% 5-year EPS CAGR. Although Becton has historically been a healthcare company, it has been making strides in tech, recently acquiring a company developing anti-stick needles. Given Becton’s mediocre growth and middle-of-the-road valuation, we remain cautious on the stock. There were a number of billionaires owning Becton last quarter, including Ray Dalio, Ken Griffin and Israel Englander (see Israel Englander’s best bets).
To recap: Corning has a market-leading position with its Gorilla glass. The rapidly growing tech sector, most notably the mobile device and tablet market, will boost demand for Corning’s products while helping it reposition itself as an industry-leader. For more coverage of the stocks mentioned here, continue reading below:
Corning is cheaper than 90% of blue chips
