Sunday, September 8, 2013

"Don't try to reinvent the light bulb is an old mocking saying, but guess what? Cree (Symbol CREE) went ahead and did exactly that, with its super energy efficient LED lightbulbs."

Dow Jones Industrial Average 14,922.50 (Up) Week ending 09-06-2013

Cree Inc. (Symbol CREE, $55.58) provides another facet of the great American energy revolution. Its niche is on the conservation side, with LED energy saving light bulbs. Cree LED bulbs are sold in the USA exclusively by Home Depot (Symbol HD).

Cree is priced for growth with a PE of 75. The PEG ratio on the stock is a very reasonable 0.77 with a Return on Equity a little light at 3.27%.

1.38 Billion dollars in 2012 annual revenue. Revenue growth year over year of 27.25% is what makes this stock very exciting.

What I like best about the stock is its balance sheet. It has a sparkling Current Ratio of 10:1 which is as healthy as you can get.

CREE stock has had a steady rise up to a high of $76.00 then it got a major haircut when it reported a softer revenue growth quarter than Wall street expected, thus the more reasonable price of $55.58 to purchase it at.

2013 earnings are projected at $1.75 per share with 2014 earnings per share rising to $2.34 per share. What you would expect of a growth stock. (No dividend here).

J.P. Morgan has a "Buy" recommendation on the stock with a target price of $75.00.

CBS MarketWatch describes CREE's profile as:
"Cree, Inc. develops and manufactures semiconductor materials and devices based on silicon carbide, gallium nitride, silicon and related compounds. Its product line includes blue and green LED chips, LED Components, LED Modules, LED lighting, power switching devices and radio frequency devices. The company was founded by Calvin Carter Jr., John Palmour, Neal Hunter, Eric Hunter and John Edmond in 1987 and is headquartered in Durham, NC."

I would recommend CREE as a "BUY and hold" here for at least a two year period. It will be a good component for a Growth portfolio. Plenty of LEDs to be sold here in the next few years.

Pray for Peace in Syria. I know it seems like we are a long way away from that, but it is still possible.


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