When to Get Into GT Advanced

 | Jul 29, 2014 | 4:45 PM EDT  | Comments
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GT Advanced Technology (GTAT) has one of the most interesting stories of any tech stock I follow these days. I like it for the potential it has from a contract with Apple (AAPL) to supply sapphire covers for the newest iPhones and possibly more products in the Apple family. That aspect of the story has most investors excited about GT in 2014.

Of course, I agree that this is exciting. I believe there's potential for more than just the iPhone; sapphire could find its way into the rumored iWatch and the iPad, too. In the past few weeks, however, the stock has dropped to about $13 from more than $20. Many worry that sapphire will not be included in the iPhone 6.

Earlier today, GT investors were nervous at answers given by Corning (GLW) executives on their earnings call related to future guidance about "gorilla glass" for smartphones in the coming year. The answers were fuzzy but still stuck to forward guidance of revenue rising next year by 20% or so. GT Bulls were hoping for a more pessimistic outlook and, as a result, seem worried now that GT has missed the window for the iPhone 6. At current levels, GT's stock is off 31% in the past month. Its Relative Strength Index is now below 30.

If all the negative chatter is true, there could be one last big flush in the stock price, which would mark a great entry point.

The long-term prospects for sapphire in Apple products are still quite strong. Additionally, of course, there's the potential for GT to sell its sapphire to other smart phone providers.

Another big aspect of the story for me is the work GT is doing related to solar. It has some exciting products coming out in early 2015 that should feed into the emerging growth for solar. There are also rumors of combining solar panels within sapphire to help recharge batteries of portable devices on the go. None of that potential in sales is priced into GT's shares at these levels.

GT's next earnings call is Aug. 5 and I expect shares to fall again if management says nothing of significance related to Apple (which they shouldn't). Then we will have to wait for the announcement, likely in September, of the new iPhone and we will all finally know if it has sapphire or not. If it's not included, that could be the moment to load up for the long-term on the potential knee-jerk weakness. I'm still not convinced it won't be included in some way at least.

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