4 Reasons to Buy Cree Now

Before Cree (Nasdaq: CREE  ) releases its earnings next week, it's time to take a look at why I think Cree is still a great buy this year.

Efficiency at the right time
The talk about CO2, renewable energy, and reliance on oil really only leads to one energy certainty for the future: Efficiency will be a winning strategy. And better yet, efficiency that's really, really easy will be a no-brainer.

The reason LED lighting is taking off is the power advantage LEDs have over traditional lighting sources. General Electric (NYSE: GE  ) is also pushing LEDs, but Cree is the most focused way to invest in an LED future.

Explosive growth
In the most recent quarter, Cree grew revenue 59% from a year earlier, and it is expecting more growth from sources such as retail sales at Home Depot and a recent signing with Denny's. These types of agreements will help drive revenue to an expected $270 million to $280 million this quarter.

Balance sheet
It isn't often you see a company growing at 59% with no debt and $1.1 billion in cash and equivalents, but that's exactly what Cree offers. This gives management flexibility to make capital investments or make acquisitions, although the rumors of Cree buying Aixtron (Nasdaq: AIXG  ) recently were a little misguided.

History of beating expectations
One of the first things I look at when researching a stock is to look at the performance in the last four quarters versus analysts' expectations. If a company is falling behind expectations, it tells me investors will be uneasy, and if a company consistently beats expectations, analysts haven't priced in enough growth. Cree definitely falls in the latter category beating expectations by an average 11.2% each quarter. Analysts are catching up to the story. This is something worth watching next week.

Cree isn't without its risks. New technologies like OLEDs from Universal Display (Nasdaq: PANL  ) could impinge on cell phone backlighting and other products, but for now Cree sees plenty of growth in its future.

Interested in reading more about Cree? Click here to add it to My Watchlist to find all of our Foolish analysis on this stock.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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