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The Biggest Lighting Evolution Since Edison – And the Company That Will Benefit the Most

 January 12, 2011 10:47 AM
 


by Alexander Moschina, Investment U Research

Imagine a market worth $90 billion – and set to compound at an annual rate of 22%, according to NextGenResearch.

Imagine no more. Analysts say this will become a reality for the Light-Emitting Diode market (LED) in 2011. It's the biggest revolution in the lighting industry since Thomas Edison patented the electric lamp. And it's not surprising, given that LEDs last up to 50 times longer than traditional electric bulbs.

Now picture a company at the forefront of this industry – and the profits it could churn out for investors savvy enough to buy the stock. It's already worth $7.29 billion and Google (Nasdaq: GOOG) has invested $3 million in its groundbreaking research…

[Related -Boost Your Dividend Yield]

Cree Unveils the Most Efficient, Most Profitable Lamp Ever

Founded in 1987, Cree Inc. (Nasdaq: CREE) is an LED market leader. In October, the company announced that its quarterly sales hit a record $268.4 million – a 59% year-over-year increase.

Then in November, it unveiled the XLamp – the most powerful and most cost-efficient LED lamp ever. But most impressive? The product went from concept to commercially available in just eight months.

[Related -Cree, Inc. (CREE) Q2 Earnings Preview: What To Expect?]

And according to Director John Edmond, future developments may roll out even faster. In fact, the new technology is so advanced that it could "enable applications we haven't even thought of yet," he said.

And fast development will be key, as LED demand skyrockets. Today, just 5% of all lighting fixtures use LED technology. But in just five years, LEDs will make up more than 50%.

It's no wonder that Cree shares are up 33% since the start of November. But it's only the beginning. Because according to recent forecasts, the company's Chinese business is about to kick into high gear…

Cree in Prime Position to Capitalize on China's Booming LED Market

In China, revenue from LED-backlit TVs is poised to reach $24.8 billion this year – a jump of more than 3,000% from a mere $77 million in 2009.

Riddhi Patel, iSuppli's director of televisions and retail services, cites the Chinese stimulus plan as cause for the sharp increase. He added, "Demand in China is so robust that availability of LED-backlit sets has become constrained."

That's excellent news for Cree, as Asia accounts for almost two-thirds of its business. And the company is preparing itself for the coming flood of business. To date, it's invested nearly $167 million in its Chinese operations, which puts it in a very strong position to significantly grow its sales as the lighting industry takes off.

Good investing,

Alexander Moschina

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