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Investing in LED Growth with CREE (NASDAQ: CREE)

Written By Brian Hicks

Posted March 23, 2010

Back in 2007, Wall Street thought the boom in LED technology was overdone.

But what did they know?

Simple research would’ve proved the boom was just getting started…

Here’s how we played the situation.

December 2007 was when we bought Cree (NASDAQ: CREE) at $18, as Wall Street bashed away.

President Bush had just inked an 822-page energy measure that included a future ban on 100-watt incandescent bulbs by 2012. It would make way for bulbs that use 25% to 30% less energy, lop an estimated $18 billion off annual U.S. electric bills, and cut consumer electricity usage by 60%. It’s a move that’ll add upside to the likes of the LED stock mentioned above.

American Technology Corporation CEO Richard Prati believed that Cree’s LED technology would grow "astronomically" in coming years, and that LED technology would proliferate like Internet companies did in the 1990s; that LED could save consumers up to 90% on energy bills; that its "positive environmental reputation will attract consumers."

Why the Street was trying to talk Cree down, we have no idea. But we did know that the Street missed out on buying a growth stock at $18/share.

Would it be too much to think they were trying to talk it down to buy on the cheap?

Even today, Cree (a potential $100 stock) is being downgraded by LED critics that think it’s run up too much, too fast.

But here’s why we still like it.

The Street still fails to see that we’re not talking about an overvalued stock here… What we have is a stock in a growth industry expected to grow at an increasing rate over the next five years.

And if demand continues to grow beyond 2012 — as projected — how can the stock be overvalued? It can’t be. Cree is in an industry that’s just beginning to skyrocket.

This is a stock that Pure Asset Trader has been recommending since its $18 days.

And even now at $70, it’s still a buy because people know — as well as the government does — that LEDs are the future. We’re talking about a market with 388% growth potential; a market expected to far exceed $1 billion by 2011, dwarfing the 2005 market value of $205 million.

Only a fool would downgrade Cree here.

Even venture capitalists are still lining up.

According to the Wall Street Journal:

Many venture capitalists are touting the energy efficiencies of next-generation lighting, including start-ups using light-emitting diode, or LED, technology. LEDs, though more expensive than incandescent bulbs or fluorescent tubes, draw much less power, last for many years and contain few materials that are harmful to the environment.

Even President Obama is getting behind the technology, saying one of the most important steps is to set new efficiency standards on fluorescent and incandescent lighting:

Now I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and our businesses…

Between 2012 and 2042, these new standards will save consumers up to $4 billion a year, conserve enough electricity to power every home in America for 10 months, reduce emissions equal to the amount produced by 166 million cars each year, and eliminate the need for as many as 14 coal-fired power plants…

And by the way, we’re going to start here at the White House. Secretary Chu has already started to take a look at our light bulbs, and we’re going to see what we need to replace them with energy-efficient light bulbs.

Are You a Fool?

Why anyone would be foolish enough to ignore a growth stock in a growth industry is beyond me… particularly growth stocks with billion dollar potential.

Chalk up another one for independent investment analysis. 

We’ve been trading Cree since $18. It wasn’t more than a year ago that it was part of our 40 for 40 run in the Pure Asset Trader advisory… and it’s now part of our recent 50 for 52 run.

Be on the lookout later this week when I share my newest research with Wealth Daily readers. 

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

P.S. Wall Street may have missed this gem at $18 a share… but we didn’t. Now at $70 with government support for LED technology, chances are good that it could more than double… again. Learn how you can profit from it now.