Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Has This Growth Stock Finally Turned the Corner?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Shares of LED lighting expert Cree (NASDAQ: CREE  ) roared on Wednesday, surging 20% overnight. The company crushed Wall Street's earnings estimates with an $0.18 per share bottom-line performance. Earnings rose 80% year-over-year on 14% higher sales. It doesn't take much of a top-line boost to make a dramatic difference to bottom-line income when the cost structure is pretty much fixed.

If you'll allow me a sidebar here, do keep this phenomenon in mind when Netflix reports earnings later tonight. That's another business with the majority of its operating costs set in stone, giving tons of earnings leverage to relatively small revenue changes.

Back to the main attraction. Cree's second quarter saw improved sales in both the LED components and lighting fixture divisions. The next quarter is tracking right in line with this report's boisterous growth trends, and CEO Chuck Swoboda likes the far future even better. In the longer term, "we see opportunities to move the market even faster than what has been experienced to date," he said.

LED lights are going mainstream, and fast. A quick trip to your favorite home improvement store will confirm how quickly traditional light bulbs are going obsolete. Those twisty fluorescent lamps have taken an early lead in the race to replace traditional bulbs, but LED options are not hard to find anymore. They're also more efficient and will last longer, so I expect LED lamps to eventually crush the fluorescent craze. Demand must increase quickly enough to make it economically sensible to ramp up production, and it's a slippery slope down that virtuous cycle of production costs once you get started.

Cree appears to have found the start of that hill already. General Electric (NYSE: GE  ) and Philips (NYSE: PHG  ) are accelerating the revolution with LED products of their own, but the new lights won't matter as much to their investors. Philips and GE are multinational conglomerates with dozens of major product lines, from electronics and light bulbs to nuclear reactors and locomotives, while Cree is laser-focused on just the LED market. If and when this sector takes off like a rocket, only one of these three stocks will really follow suit.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it's arrived, and with the balance of manufacturing power shifting yet again, you can profit with the "3 Stocks to Own for the New Industrial Revolution." They're the biggest industry disrupters we've seen since the personal computer, and you can read more about them in our free analyst report. Click here to learn more.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2211222, ~/Articles/ArticleHandler.aspx, 9/29/2016 9:59:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 43 minutes ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
CREE $25.33 Down -0.19 -0.74%
Cree CAPS Rating: ****
GE $29.53 Down -0.37 -1.24%
General Electric CAPS Rating: ****
NFLX $96.67 Down -0.81 -0.83%
Netflix CAPS Rating: ***
PHG $29.38 Down -0.59 -1.97%
Koninklijke Philip… CAPS Rating: ***