Pick Up Suppliers In a Weak Economy

During a market pullback, investors tend to gravitate towards well-known companies with strong brands. Many of those companies, in turn, do what they do thanks to a strong network of suppliers. That can include anything from providing raw commodities to nearly-finished goods.

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  • Since these companies aren’t as well known, they tend to sell off during a market downturn, and then can benefit proportionately from the market rebound. So it’s no surprise that some analysts may be targeting them for big returns now.

    One supplier seeing an analyst upgrade is glassmaker Corning (GLW). The company’s specialty products are particularly useful for the production of smartphones, which continue to see strong demand from replacements and upgrades by users.

    Shares are down 13 percent, in-line with the S&P 500 over the past year. Yet the company is inexpensive at 15 times earnings, which stand to improve with the economy in the months and years ahead.

    Action to take: Investors may like shares at current prices or on a pullback. Shares yield 3.4 percent at current prices, and the dividend has been increased over time.

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  • For traders, shares have gotten oversold in the short term, and look set for a quick move higher. The June $36 calls, last going for about $0.80, offer mid-double-digit returns or better on an oversold bounce in the coming weeks.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.