Cartoonists just might need a new caricature for someone getting a bright idea. Traditional light bulbs all across the globe may be turning off if some states, Congress, and even a couple of countries have their way in banning them. Will drawing a light-emitting diode over someone's head convey the same message, even if it is more energy-efficient?

Some not-so-bright lights
Regular light bulbs just don't make the grade anymore. Traditional incandescent light bulbs produce about 12 to 15 lumens per watt, which is a measurement of the bulb's lighting output. Modern white LEDs produce about three to four times more light, while some high-end LEDS are capable of producing 52 to 64 lumens per watt. A compact fluorescent bulb (CFL), however, already produces about 60 lumens per watt. To put those figures in perspective, legislation recently introduced in Congress calls for all bulbs to produce 60 lumens per watt by 2012, which would rise incrementally to 120 lumens per watt by 2020.

Last year, Wal-Mart (NYSE:WMT) began actively promoting CFLs as it tries to recapture its softer and more cuddly persona, while Philips Electronics (NYSE:PHG) -- the world's largest manufacturer of light bulbs -- has come out in favor of an outright ban on the incandescent kind.

Philips readily admits it supports a ban on the bulbs because it doesn't want competitors to fill the void if it simply stopped producing them itself. However, the company notes that simply selling more expensive CFLs -- which may last significantly longer than incandescents -- won't necessarily translate into more profits.

Still, with the increased attention being given to more energy-efficient lighting -- Australia is the first country to call for banning them, while the states of California and New Jersey are considering adopting similar measures -- there are certainly companies that stand to find themselves in the energy-efficient spotlight. Certainly Philips would be one, as would General Electric (NYSE:GE) and Siemens (NYSE:SI). GE, however, opposes a U.S. ban on bulbs because of the impact on jobs in the U.S. -- 90% of CFLs sold here are produced in China.

The bright future of lighting
Halogen bulbs and CFLs are expected to gain market share in the next several years, with solid-state LEDs being the long-term winner. The main problem with widespread adoption of LEDs is cost: The Department of Energy says incandescent and fluorescent bulbs cost about $1 per kilo-lumen, while LEDs cost as much as $50 per kilo-lumen. Still, that's down from $250 per kilo-lumen as recently as 2004, so costs may become more competitive by the time incandescent bulbs are phased out.

Solid-state lighting is an advanced technology that can create energy-efficient lighting through the use of LEDs. Until recently, they were only capable of emitting red light, making them impractical for most common uses. But researchers have been able to create green and blue LED light as well, allowing the creation of a full spectrum of colors, which has become particularly useful in TVs, movie screens, and mobile phones. LED lighting also lasts 20 times longer than regular incandescent bulbs.

A pair of high beams for investors
Who are the primary LED manufacturers today? Philips and Siemens have subsidiaries that build a lot of LEDs. However, I believe the two best opportunities for investors are also two of the smaller LED manufacturers: Cree (NASDAQ:CREE) and Color Kinetics (NASDAQ:CLRK).

I've actually put my dollars where my LEDs are with Color Kinetics for a couple of reasons. This small-cap stock virtually dominates the LED industry because of the patents it owns. Although competitors have long griped that Color Kinetics' patents are defined by prior art, the courts have consistently upheld the patents. Over the past 10 months, the company's stock has risen about 50%, as both revenues and profits have grown. With its LEDs already in use in facilities around the world, Color Kinetics is positioned to make everyday home use a reality.

Cree, on the other hand, has had a number of problems over the past year or so, even though its high-end products have been strongly received. Earnings prospects have dimmed, primarily because a lot of its LEDs are produced for mobile phones, which have faced robust competition from Asian LED manufacturers. The need for ambient lighting, however, may end up being the catalyst that propels Cree forward.

Foolish final thoughts
With the world deciding to turn off the lights and some big players deciding that alternatives are needed right away -- to the point of imposing legislation to achieve the desired result -- opportunities abound for investors to profit from the bright lights of the LED industry.

Wal-Mart is a recommendation of Motley Fool Inside Value. Turn the lights on with a 30-day guest pass to find out why the mass merchandise discounter may still be a good value today.

Fool contributor Rich Duprey owns shares of Color Kinetics and Wal-Mart, but he does not own any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.