The Coming LED Boom

Changing Tides Stoke Profits in Efficiency Technology

Written by Brian Hicks
Posted June 3, 2010

The long weekend was officially over, but I hadn't had enough...

So even though I came into the office on Tuesday, I made plans to scoot out a bit early. After all, the striped bass season in the Chesapeake's tributaries begins June 1, and after the first few days, I swear the fish are wise to the game. Timing is crucial.

I was out the office door in Baltimore by the closing bell and met my dad at the boat ramp in Port Deposit — on the Susquehanna River in Northeast Maryland — by five o'clock.

He hopped into the boat and I backed the trailer into the water long enough for him to back off. I parked the truck and we were off...

The plan: To catch small white perch for bait before heading north to the Conowingo Dam to drift for the big boys.

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Keeping Your Eyes Peeled

To be a great fisherman — or a great investor — you have to keep your eyes peeled.

Armed with a good pair of polarized glasses, I'm always looking for underwater structure, certain currents, and natural patterns that can help me catch more fish. Even when not on the water, I'm thinking of ways to improve my chances.

Same goes for investing. But instead of sunglasses and submerged trees, I'm using charts, legislation, trends, and headlines. And, as with fishing, even when not in front of the tickers, I'm thinking of ways to make better investments.

For me, fishing and investing aren't hobbies; they're lifestyles.

And on really good days, those lifestyles get to mingle. Tuesday was one such day.

A River of Change

To get a sense of my surroundings, take a look at an aerial photo of the area where I was fishing.

Susquehanna_Bridge_Swing_Span

Passing underneath the bridges, I couldn't help but notice all the high-wattage lights warning boaters and guiding motorists and trains.

Now, we started to show our hand last week with an article on the trouble with the common light bulb. And Green Chip has increasingly been talking about lighting as a major investment theme.

It's not hard to see why...

All too often in the energy world, emphasis is put on generation.

Dams, nukes, turbines, and panels are sexy. They create usable energy that can be sold, and so their value is easy to understand.

But efficiency is less sexy. It doesn't make energy, but rather helps us use less of it.

And in an energy industry dominated by large utilities that make more money when they sell more electricity, it's been more than tough for efficiency measures to gain any meaningful penetration.

But numbers don't lie. And as more and more businesses and consumers realize they can save money — not energy, because there's no direct benefit in that — efficiency measures are quickly gaining traction.

A similar phenomenon recently occurred in the auto industry, where for years efficiency had no real bearing on sales. When gas was below $2.00, millions of Americans were happy to trod around in SUVs.

Being inefficient had no real negative consequences on the bottom line.

But when gas crested $3.00, we witnessed a rapid and lasting shift toward more efficient cars. Compact cars are now among the best-selling models, and each major car company has made them a cornerstone of their business plan.

Efficiency standards for cars have been raised at the federal level, and the Hummer brand no longer exists.

Now, the efficiency bull's-eye is being moved from gas to electricity. And old appliances and lights are the new gas-guzzling SUVs.

Seeing the Light

As darkness approached, I hooked and landed the one and only striped bass of the afternoon — a 24.5” keeper that was delicious the next day stuffed with lemon, butter, and herbs.

And after it was in the cooler and we were headed back in, I couldn't help but notice all the lights again. The bridges were now lit up, as were the cars atop them. On the now black water, lights from ships, barges, and lingering fishing boats reflected far and wide.  Even the dam wore a crown of equally-spaced bulbs.

All those lights, I thought, wasting all that energy...

You see, the modern incandescent bulb wastes 98% of the energy it uses as heat. That's just one of the reasons it's being phased out across the globe.

And a host of new technologies are jostling to take its place.

Just as I do my research before fishing, we've done extensive research on the future of lighting.

And what we've found is one particular technology — and one company — that is simply blowing all others out of the water.

They're already providing advanced lighting for McDonald's, Starbucks, Wal-Mart, and plenty of others... And they're retrofitting Navy ships with these lights at over $1 million apiece.

As conventional lights go the way of the Hummer, this company has the potential to become as ubiquitous as Edison himself. And its share price, currently at about $1.00, will soon show the true value of a company about to corner the global lighting market.

Call it like you see it,

Nick Hodge

Nick