Image source: Cree.

What: Shares of LED company Cree (NASDAQ:CREE) jumped 13% in February, in part because of a new partnership with Cisco (NASDAQ:CSCO).

So what: Cree announced a new platform called SmartCast, which is a Power over Ethernet product built for the Internet of Things. The LED lighting platform will work with Cisco's Digital Ceiling to make lighting more intelligent and efficient.  

LEDs are starting to amass wider adoption and partnerships with large companies like Cisco could help drive sales to commercial customers, who will better understand the value proposition of more efficient lighting. 

Now what: While partnerships like this are good news, I think the more important factors to watch are the bottom line. Cree reported a strong end to 2015, and heading into this year, there's steady growth as well as solid profitability. If that continues in 2016, helped by partnerships like the one with Cisco, the company should have a bright future. But the stock is still expensive at nearly 30 times this year's expected earnings, so the bar is already high at Cree.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.