Optical glass maker Corning (NYSE:GLW) made a King Kong-sized splash at the recent Consumer Electronics Show with its new and improved Gorilla Glass 2.0. The very thin and damage-resistant optical glass is widely used in smartphones and tablets, and thanks to the engineers at Corning, the glass now is 20% tougher.
The new Gorilla Glass is likely to be a big revenue winner for Corning, as smartphone and tablet PC makers rush to include the new product in their devices. However, glass isn’t the only business Corning is counting on for revenue. Now the company hopes to put a little clean-diesel power into its bottom line as well.
Anyone who has ever driven behind an 18-wheeler knows how dirty diesel-powered engines can be. Although these engines are more durable, more reliable and offer greater torque than traditional gasoline-powered engines, their drawback has always been their high pollution output, particularly soot.
But what if you could significantly reduce that pollution? That’s what the engineers at Corning asked themselves, and their answer just may result in the company’s next big flood of profits.
Recent sales of Corning’s line of products designed to control diesel-engine emissions from big trucks and other heavy-duty vehicles have gone full-throttle. The company says it has sold out of its Celcor substrates and DuraTrap filters for the big-rig diesel engines, and the demand has allowed Corning to increase prices on these products. The best part here for Corning is that the clean-diesel market is just beginning to accelerate.
According to one industry observer I spoke with, increased production of diesel-powered vehicles combined with new government restrictions on diesel emissions could be just the right mix of factors to fuel Corning’s clean-diesel products. Estimates peg production of diesel-powered heavy-duty vehicles in the U.S. and Canada to grow from approximately 125,000 in 2010 to about 225,000 in 2012. Worldwide, the number of heavy-duty diesel vehicles is expected to more than double by 2014.
The likelihood for such growth is one reason why Corning has decided to build a new factory to pump out products from its Corning Environmental Technologies division. Corning expects to see somewhere in the neighborhood of a 40% rise in sales over the next several years in this division. That kind of surge would indeed be significant, considering the division racked up about $1 billion in sales last year.
Corning shares, now at $14.42 are already moving back into the fast lane, rising 14.6% in the past month after dropping an exhaust-sucking 25.5% over the previous year. On Jan. 11, Sterne Agee upped its recommendation on GLW to buy, with a price target 0f $15.
If Corning continues to turbocharge sales of its clean-diesel business, and if its dominance in the optical glass market remains on track, $15 a share may soon get left in the dust. Investors just could be staring at the next must-own industrial powerhouse.
At the time of publication, Jim Woods held no positions in any stocks mentioned here.
