What happened

Shares of LED lighting specialist Cree (WOLF 10.11%) are lighting up the stock market with a 10.3% gain in 3:10 p.m. EST trading Thursday.

The gains came after JP Morgan analysts publicly supported the stock -- for a surprising reason.

Analyst supporting a rising stock arrow

Image source: Getty Images.

So what

Cree has historically been best known for its LED lighting products, found in flashlights and LED bulbs. In recent years, however, the proportion of Cree's revenues coming from LEDs has been shrinking and the proportion coming from its Wolfspeed silicon carbide, power modules, and semiconductors business has been growing -- to the point where it now contributes a bare majority (52%) of Cree's revenues.

It's this side of the business that has JP Morgan excited, as it sees "growing momentum" surrounding the electric vehicles industry that utilizes many of these Wolfspeed products. According to a report on JP's note carried on TheFly.com today, Cree's Wolfspeed division "commands a majority share of the silicon carbide materials market and a leading share of the power device market," both of which are ways to "invest in the theme" of electric vehicles.

Now what

In JP Morgan's opinion, the growth of the electric vehicles industry has the potential to grow Cree's stock price as high as $90, and justifies rating the stock "outperform" -- but beware.

Over the very long term, JP Morgan may be right about Cree's place in the electric car revolution, or it may be wrong. In the near-to-medium term, however, Cree is an $8.9 billion stock with no income (actually $338 million in net losses over the last 12 months), no free cash flow (actually negative free cash flow -- $318 million worth), and a consensus among analysts that it won't turn profitable before 2024 at the earliest.

Right now, it's the farthest thing from a "bargain" stock, and I'd be very cautious about following JP Morgan's advice on this one.