Corning Incorporated is a global tech company that makes big dollars off its LCD screen unit. That means big dollars for Corning in the next five years. Why do you ask? Well for a number of reasons, number one being the mandatory FCC requirement for all televisions to be digitally equipped by 2009. To put it bluntly, this means no more tube TV's in three years.
It's part of the FCC plan to broadcast digital signals across America in order to provide HD TV and other luxuries much quicker and easier. Corning makes the LCD screens for these newer digital televisions and will see its incoming orders explode.
America probably will not be the only country to attempt this switch over. China, India and Europe all have the resources to attempt a digital revolution as well. Look for Corning to pick up a substantial amount of orders from these nations.
While future incoming orders expect to boom, Corning cannot take on all these orders unless its fundamentals are in order. Let's take a quick glance at them.
- Forward P/E of 28
- 22% Debt to Equity Ratio
- Current ratio: 1.7
- 15.8% 5 year Earnings Growth rate
- $2.5 billion in cash and short term investments
– looks fairly valued in comparison with other tech stocks. Remember techs normally carry higher P/E ratios…Unless of course you're dealing with Microsoft.
– its debt over equity is comparable to other firms in its industry so this reduces risk.
– normally I look for ratios of 2 and over so keep this in mind when you conduct your own valuations.
– Companies with growth rates of 15 and above are my kind of stocks.
– Corning has the funds to conduct R & D and to promote its products more effectively.
From this information, Corning looks like a low to moderate risk and potentially high return investment. I do not see LCD TV's receiving much competition in the future since reports state LCD TV's show better pictures and last longer than plasmas do. Anytime a product is an industry leader it's a gigantic plus.
I even purchased a new 15 inch LCD just yesterday from Best Buy. It's my 2nd LCD TV purchase in less than four months because this new digital tech stuff beats the heck out of analog devices.
Bottom Line: Do your own research and invest in digital tech before its too late.
If you're looking for a retail play on LCDs, get into Best Buy (BBY). Best Buy is the best electronics retail in the world hands down. Last month Best Buy opened a store in Japan in an attempt to expand internationally. So be sure to keep BBY on the radar as well.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
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While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.