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CREE: Toby Smith's Play On 'Green' Lighting

July 18, 2007

by Steven Halpern
BloggingStocks.com

ChangeWave Investing, with its well-known editor Toby Smith, is recommending Cree (CREE) as a play on "the secular shift to solid-state lighting" which he considers an emerging "green" trend.

He explains, "This sector -- a promising play on clean energy -- is growing by leaps and bounds, and we don't want to hold off any longer on buying LED solid-state lighting component manufacturer Cree."

Toby Smith notes that the transformation from commodity LEDs for cell phones to broader market opportunities has gone slower than expected for the company. However, he adds, "With a key new acquisition and mandates around the world for the elimination of incandescent bulbs, I believe the time is right to buy shares."

He notes, "Our thesis about the transformation of lighting from 90% inefficient incandescent bulbs to 80% efficient solid-state is playing out exactly as we forecast -- and there is no turning back."

Once consumers see the difference in durability (50,000 hours versus 1,000) and the quality of light for LEDs vs. compact fluorescent bulbs (night and day, he states that he expect light bulbs to "go the way of the dodo bird."

He observes, "The world can no longer afford incandescent lighting, and that puts Cree in the catbird seat. The firm has the best white-light LED technology, the necessary manufacturing expertise, and now they have a subsidiary in -- you guessed it -- China, which is really supercharging their white-light LED sales."

A major impetus behind this trend, he notes is light-bulb banning. He notes that California and Canada are banning the use of incandescent bulbs by 2012, while Australia has announced plans to ban incandescent bulbs by 2010.

He adds, "The European Union votes on a region-wide ban by 2012 in the next few months. And in New Jersey, where the first practical incandescent bulb emerged from Thomas Edison's laboratory in 1879, a bill has been introduced to ban its use in government buildings."

Why? He explains, "Energy conservation and strategies to overcome global warming are becoming increasingly important political and social issues. The fact is, banning incandescent light bulbs is a relatively easy way to make a significant contribution to energy conservation." Indeed, he notes that in the United States, lighting accounts for 22% of all electric consumption.

As to the stock, he notes, "There is no denying that financial results at Cree have been disappointing for the last few years." But, he says, that's about to change. Toby Smith notes, "Cree now has a very compelling valuation. Now is the time to invest on the solid-state lighting wave and now is the time to buy Cree."

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