Today’s investment idea is all about lighting.  No, it’s not those curly compact fluorescents that are filled with MERCURY and require you to evacuate the room if you break one.  The main reason we’ve got those today is that the energy savings sounded good to the folks in Washington and the profits sounded good to the manufacturers.

No, my idea is about the NEXT stage of the lighting revolution, the era of Light Emitting Diodes (LEDs), which are basically silicon chips.

The leader in the industry is Cree (CREE), of Durham, North Carolina, the market leader in the industry.  Though its products still cost substantially more than incandescent bulbs or compact fluorescents, prices are coming down fast as commercial success in niche markets like aviation and automotive enable more research and result in greater technological progress.

The stock has earned an appearance in Cabot Top Ten Report four times this year (while trading at 24, 27, 37 and 420), and last Wednesday, Cabot Market Letter editor Michael Cintolo had this to say about the stock.

“The kinds of stories that feature Cree tend to be pretty dry.  On Tuesday, the company announced that it had squeezed 186 lumens per watt out of one of its high-power LEDs (light emitting diodes).  It’s a little more dramatic when you know that a standard incandescent bulb yields about 13.8 lumens per watt and a standard fluorescent only hits a maximum 72 lumens.  Watts cost money, and Cree is pushing LEDs into uncharted territory; LEDs could be just starting a huge growth wave as cities in the U.S. and elsewhere look to save on energy costs.  We featured Cree here on November 4 when its stock was trading at 43.  Now, after spending two weeks under resistance at 48, CREE has broken out to near 50.  We like it.  BUY.”