The market is heading up in trading today as leaders from both political parties have decided to quit preening before the media for a day and actually talk to each other on the budget and the debt limit. This would certainly be a welcome development for the near-term direction of the market.
Obviously stocks would benefit nicely from any agreement that took these political issues off the table. I think the tech sector would outperform the overall market in a return of a "risk on" market as valuations stand at lower levels than most other sectors. The sector should also benefit from important launches (Ex, iPhone 5C/5S) in front of the approaching holiday season. One stock in the sector I still like and is selling at an attractive valuation is Corning (NYSE:GLW).
Corning produces specialty glasses, ceramics and related materials worldwide. The company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences.
Seven reasons to own Corning at $14 a share:
- The company offers a solid dividend for a tech stock. The shares yield 2.7% and Corning has doubled its payout over the last few years.
- One of the reasons the company has and should be able to continue to raise its payout is its solid balance sheet. Corning has over $2B in net cash on its balance sheet.
- Revenue growth should accelerate in 2014. After tracking to flat sales growth this year, analysts expect over 5% growth in FY2014. The stock sports a five-year projected PEG of under 1 (.92).
- Insiders believe in the company's prospects judging by the fact they have been net buyers of the stock so far in 2013.
- The company has beat consensus bottom line expectations each of the last four quarters. Gorilla Glass has quickly surpassed $1B in annual sales as well.
- GLW is priced at under 10x forward earnings, a slight discount to its five-year average (10.5).
- The stock appears to have short term technical support at these levels.