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Corning (NYSE:GLW) has been one of the most frustrating positions in my portfolio since early in the year. It is selling just over where I originally acquired the shares in January despite sporting cheap valuations and a solid dividend. With the dividends and option premiums I have received (expired covered calls), I am up decently on the position but the stock is still selling below what I would consider its fair value. However, the stock has a nice 15% move over the last month and is starting to acquire some positive catalysts. It could be in the early innings of a significant rally.

Recent positives for Corning:

  • Goldman Sachs upgraded the stock to "Buy" and raised its price target to $16 from $14 a share.
  • Barrons also had another positive piece on the company in this week's magazine.
  • After falling for months, consensus earnings estimates for both FY2012 and FY2013 have stabilized in the last month.
  • The rollout of Apple's (NASDAQ:AAPL) iPhone 5 should be a positive for Corning's Gorilla Glass and is one of the reasons analysts are calling for 7% revenue growth in FY2013 after flat sales in FY2012.

"Corning Incorporated produces specialty glasses, ceramics, and related materials worldwide. The company operates in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences." (Business description from Yahoo Finance)

4 reasons GLW still has upside at $13 a share:

  1. The company's balance sheet has over $3B in net cash on the books (15% of market capitalization) and yields 2.3%.
  2. In addition to Goldman Sachs, Oppenheimer also upgraded the shares to "outperform" in the last month.
  3. The stock is selling at the bottom of its five year valuation range based on P/E, P/B, P/S and P/CF.
  4. The company has increased operating cash flow 70% in the last three years and the stock sells for just 6 times OCF. GLW sells for less than 8 times forward earnings subtracting net cash.
Source: Corning: These Cheap Shares Are Finally Moving Higher