Your Luminescence Is Approaching Obsolescence

Your light bulbs are obsolete. Yes, all of them. They're going away and you won't miss them.

LED light bulbs are ready to roar onto the scene, replacing the old incandescent bulbs left and right. In 2012, the inefficient 60-watt incandescent Edison-style bulbs will be illegal by federal law, but LED lights will fit the new energy standards nicely. Home Depot (NYSE: HD  ) just introduced an affordable 9-watt bulb that uses 80% less power and is said to last up to 22 years. Not far behind Home Depot is competition from General Electric (NYSE: GE  ) , Phillips (NYSE: PHG  ) , and Siemens (NYSE: SI  ) subsidiary Osram Sylvania, each of which have their own lower-power bulbs set to premier before the 2012 rules go into effect.

Unlike the compact fluorescent pigtail tubes, LED bulbs generally look like the light bulbs you're used to, light up immediately, and don't contain any mercury. They're also even more efficient at turning electrical power into usable light, and will last for a very long time. Fluorescents last about four times longer than an old-school bulb, but you'd have to replace that quirky efficiency bulb three times before the LED lamp burns out.

The investing impact of this forced revolution is profound, if you know where to look. GE, Philips, and Osram are all replacing their own incandescent products with fresher goods. Depending on the profit margins of each product, that could be a boost or a wash. But then there's LED specialist Cree (Nasdaq: CREE  ) , which both makes light bulbs of its own and ships LED components to the big boys. This puppy won't be cannibalizing its own sales, and will most certainly do rampant business over the next few years.

Thinking supremely long-term, you might even look at Universal Display (Nasdaq: PANL  ) , as its organic LED lighting products are a few years away from commercial products on store shelves. Manufacturing efficiencies and general flexibility of the OLED technology could make the LED era short-lived.

But for immediate results, Cree is where it's at. I'm heading on over to CAPS to rate the stock "outperform" for the next four years or so, because we're standing in the foothills of the Himalayas here. You're welcome to throw on a backback, grab a sherpa, and come along. The path will be well-lighted.

Fool contributor and CAPS All-star Anders Bylund owns shares in Universal Display, but he holds no other position in any of the companies discussed here. The Home Depot is a Motley Fool Inside Value choice. Universal Display is a Motley Fool Rule Breakers selection. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (5) | Recommend This Article (9)

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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.

  • Report this Comment On May 18, 2010, at 5:12 PM, JRMtwo wrote:

    Before you buy stock in a LED light bulb maker you better take a look at the product that is on the market. The LED light bulbs are low wattage and long life but lighting performance is most otten lacking. Fewer lumens (light) than the bulb being replaced will leave you with substandard lighting. Early failures are common with the units on the shelf. And the quality LEDs are EXPENSIVE compaired to the incandescent.

    Otherwise the LED light bulb would not need a LAW to remove the incandescent from the market and force the customers to buy. Most people who have tested the LED light bulbs are stocking up on incandescent bulbs and GE, Phillps, and Sylvina/Osram are cashing in on the sales.

  • Report this Comment On May 18, 2010, at 5:44 PM, JRMtwo wrote:

    Before you start buying stocks of LED light bulb makers you had better look at the LED light bulbs that are on the shelf now. While they are lower wattage and longer life the LED light bulbs produced less light (lumens) than the incandescent light bulb they replace. Household 60 watt incandescent 840 lumens, LED 10 watt replacement 300 lumens. And the high quality LEDs are EXPENSIVE.

    People who have tested the LED light bulbs are stockpileing incandescent lamp by the truckload. They know that if you need a law to ban incandescent light bulbs to sell LED light bulbs the LED is a poor substitute.

  • Report this Comment On May 18, 2010, at 6:31 PM, LEDfan wrote:

    Yes, there are stinky LED products out there. It is a buyer beware situation, however, the quality folks like CREE are demanding and setting standards. As well, the main problem as I understand it is the solder joints, we all have seen the green traffic lights with failed lamps. This is probably a solder problem, which can and is being overcome.

  • Report this Comment On May 18, 2010, at 6:35 PM, stan8331 wrote:

    LED's are undoubtedly the future but their output likely won't be sufficient to usurp fluorescent bulbs for a few more years, especially since the departure of incandescent bulbs should lead to increased volumes and lower prices for fluorescents.

    Back in the 1990's a lot of people correctly predicted that the Internet was going to be huge, but still lost their shirts when the tech bubble burst. Today's LED leader could end up being tomorrow's LED also-ran...

  • Report this Comment On May 18, 2010, at 9:07 PM, LEDfan wrote:

    "LED leader could end up being tomorrow's LED also-ran..." stan8331

    LED has been there, done that. If the quality players can keep up an honesty, and keep out the also tried but poor copies, off we go with a huge run. Spoil the good name of LED with junk...not so much.

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