A Few Buys, A Tracking Update, and Finally Some Numbers for NEP

By Travis Johnson, Stock Gumshoe, September 3, 2010


There are a few things I want to share with you this week — I’ll update you on a few purchases I made for my personal account, including several add-ons to existing positions and one new purchase, I’ll give you my quick take on my (finally) updated tracking spreadsheets for this year, and I’ll check in with the worst pick I’ve ever made in the “Idea of the Month” articles: China Northeast Petroleum (NEP), which looks like it’s probably about to become publicly traded again after a long halt.

(Or maybe it’s the second worst — and yes, they’re both small-cap Chinese stocks, the other contender is General Steel, GSI, currently down 83% from when I wrote about it a couple years ago.)

Personal Buys

First things first: This week I opened a new position in shares of Corning (GLW), the venerable US industrial firm that leads the world in glass technology, including, among other things, fiber optic cable, large and/or super-strong glass for TVs and handheld devices, and ceramics (including ceramic-based filters for diesel engines). I think the shares are looking very reasonably priced here, though, as I’ve often noted when writing about Corning on the free site, their reliance on a couple key products (fiber optic cable for telcos, and large format glass for TVs) means that their stock is substantially more volatile than you’d expect from a large cap manufacturer.

Corning continues to innovate — and to find ways to make their old innovations into profitable products, as with the recently ballyhooed “Gorilla Glass” that’s being used in many touch screen smartphones for durability and scratch resistance. Still, though, there’s a reason why the stock trades at a forward (and trailing) PE of 8: investors are worried about the TV cycle, and that increased competition and a soft economy will slow their sales, or that telco companies will slow investment in fiber optic networks. With a PE of 8, plenty of cash (no net debt), sector leadership, and a small and easily covered dividend (which I think they should grow, but they haven’t yet), I can afford to have them stumble a little bit even if I don’t think the pessimism is warranted. I own just a small position now, but I have another standing limit order in if it should take a dip from here.

The other shares I’ve added to ...

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