3 Compelling Investment Ideas in LED Lighting Industry
As investors look ahead to the future, one industry that may be on the cusp of exponential growth is LED (light emitting diode) lighting. One of the main reasons why I expect to see significant growth in this area is because LED technology offers significant advantages over other types of lighting, such as incandescent and fluorescent. Those advantages include extended life cycles, lower cost, and enhanced efficiency.
Below are 3 companies that should see significant growth because of LED.
The first company that should profit significantly from LED lighting growth is Cree (NASDAQ:CREE). Cree is a market-leading innovator of lighting products, LED components, and semiconductor products for power and radio-frequency applications. Cree has several products that have made traditional products look obsolete. A popular example is Cree’s new light bulb for homes. The bulbs use up to 85 percent less energy and last 25 times longer than incandescent bulbs.
Most recently, the Michael Jordan Nissan dealership in Durham, North Carolina, turned to Cree to help transform their lighting. The dealership was so impressed with the improved light quality, energy savings and maintenance savings that it has decided to continue installing fixtures in order to fully convert to LED lighting.
There is a huge demand for helping companies reduce their operating and maintenance expenditures and Cree is helping to fill that need. Over the past year, investors have also taken an interest in the company’s business as Cree shares have nearly doubled. Despite a poor earnings report last week, the company looks poised to continue demonstrating its superior LED lighting products and technology.
A second company that is small but appears intent on becoming a major player is ForceField Energy (NASDAQ:FNRG). ForceField Energy conducts business in two areas within the renewable energy market. The first segment is LED lighting, which has tremendous potential over the coming years. According to recent estimates, there are approximately 2.5 billion fixtures in commercial and industrial properties throughout the country. As more and more companies make the switch to LED lighting, the replacement cost is expected to surpass one trillion dollars worldwide. ForceField has a unique marketing strategy, which should allow the company to establish a strong foothold in the industry.
ForceField plans to focus on high ROI products with the widest use in the commercial, industrial, and institutional sectors. Additionally, the company plans to focus on acquiring customers that will undertake an ongoing LED roll-out over many years with large and continuous volumes. The second segment that ForceField Energy operates in is a waste heat recovery system that produces clean electricity. ForceField Energy owns 51 percent of TransPacific Energy, which is a U.S. based renewable energy provider that uses “waste heat” from various manufacturing and other sources to provide clean electricity. This provider has 4 primary functions:
• Sells systems directly to customers for their installation and operation
• Owns, installs and operates ORC systems
• Licenses TPE technology for specific applications and markets
• Researches and develops new ORC applications and renewable energy
Electricity demand is expected to double by 2030 and the Internal Energy Agency expects that roughly $11 trillion will be spent on building out energy infrastructure by that time. Of this large market, the renewable energy market is estimated to be approximately $500 billion. Given its strong foothold within the industry, ForceField Energy should be able to capture significant gains over the coming years.
As ForceField positions its business for the coming revolution in LED lighting and clean electricity, the company also took an important stop to appeal to investors. Earlier this month, shares of ForceField began trading on the NASDAQ. This move away from the OTC will allow more institutional investors to take a position in the growing company and will provide all traders with higher levels of liquidity and quicker execution speed.
A third company poised for growth in the LED lighting industry is Revolution Lighting Technologies (NASDAQ:RVLT). Through advanced technology and aggressive new product development, Revolution Lighting Technologies has created an innovative, multi-brand, lighting company that offers a comprehensive advanced product platform. The company markets and distributes it product through a network of sales representatives and distributors, as well as through energy savings companies and national accounts.
Revolution Lighting Technologies made headlines earlier this month when it acquired a portfolio of general illumination LED lighting products, including several product lines from CMG Energy Solutions. The company plans to rebrand the products under Seesmart, Revolution Lighting’s brand for indoor LED applications. This acquisition should pave the way for future sales growth and distribution. Investors appear to agree that Revolution is poised for future growth as share of the company have soared by more than 400 percent during the past year.
The companies mentioned in this article appear to be well on their way thanks to the expected growth within the LED lighting industry. If estimates prove to be correct, all three of these companies will see their revenues increase exponentially and cause investors to smile all the way to the bank.
Follow Tom on Twitter @tommymeyer82.