"LEDs are the Future of Lighting"

Now this is a good opening:

“If you missed out on Google at $85. . . Crocs at $15. . . or Akamai at $4. . . This little 40-cent stock can help you forget those misses forever.”

That’s from Tobin Smith’s ChangeWave MicroCap Investor, and this teaser has been circulating for a little while and has been debated over at the forum a bit, but the consensus has been reached on the solution so I thought I’d share it with the broader group here.

The teaser essentially says that if you loved Color Kinetics and Cree, you’re going to really want to get in bed with this little 40-cent stock. Like CLRK and CREE, it’s in the LED business, and LED is a hot topic these days — not only because folks like Philips are buying up LED companies and capacity, but because of the huge opportunities for energy savings by replacing conventional light sources with LEDs.

The bombast is pretty solid in the teaser — incandescent bulbs banned in Europe, Australia and Canada, probably phased out in the US … what will take their place?

Smith thinks you have to get into this stock in the next 90 days because PG&E, the California utility, is going to roll out a campaign to give rebates for LED use.

So … these LED bulbs will in all likelihood be made by Philips, but Smith says they’ll actually be manufactured by his teaser company.

Which is (again, can’t take credit for this one — it was sniffed out by a few readers who emailed me, and on the forums) …

Lighting Science Group Corporation (LSGP on the OTC market)

Hasn’t had a great day today, but it is up a bit from the 40-cent teaser, you can buy it for 50 cents if you’re so inclined. A few things to note:

This is an acknowledged hot market, with tons of companies trying to make a killing at it. LEDs have been around for quite some time and I can’t see that anyone has a proprietary technology that’s going to make them stand out — or at least, not a tiny, severely unprofitable company like this one. That’s not to say I’m right, certainly little microcaps with a good idea often burst into prominence, but it would seem very odd to me if a company grew into greatness by doing private label manufacturing for a few big light bulb companies.

The company does claim to have some protection in their niche by way of market leadership and patents, here’s a quote from a press release:

“LSG is the first company to market a high-output, dimmable, Edison-base white-LED light bulb. The company currently has 25 patents in the LED lighting space and a product portfolio comprised of 30 different SKUs. Lasting up to 50 times longer than incandescent light bulbs, LED bulbs typically pay for themselves in less than two years and do not contain the hazardous materials such as mercury that is commonly found in fluorescent and compact fluorescent products.”

So, that sounds fairly impressive. I can’t help but think that if their technology is really that good, they’ll be bought out by someone since they’ve got less than a half million in sales and seem pretty far from being profitable at the moment. mgpf over at the forums called this a “piece of crap on the edge of bankruptcy”, so Smith’s assessment is not, at least, unanimous.

Let us know how you feel about this one, I do own shares in Universal Display (PANL), which is an OLED company trying to create the next wave of Organic LEDs for display and lighting, but I don’t know much about the current LED generation.

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. Boy, the teaser sounded really good. After reading your accessment, the company sounds bad. I guess I will put $200 into it to see if it flies.

   [Reply]

   Posted by Engineer79 | July 12, 2007, 10:28 pm

2. Of course, there’s CREE

   [Reply]

   Posted by Anonymous | July 13, 2007, 2:34 pm

3. I’ve been in the lightng business for close to 40 years and am a lighting designer. I can say that LEDS are a long way from coming into the home except as a spot to be used in a recessed can or a bathroom night light. Cree, I feel, is the most advanced of the particiapnts.
   In general,compact fluorescent units to replace the Edison Incandescent are being held up dramatically becasue the American housewife doesn’t like the color. Well, LEDs have a longer stretch for acceptance.They are too bright as a source, have a lack of output in a household bulb package ,as well as having a color issue. Plus they aint cheap.

   [Reply]

   Posted by Anonymous | July 13, 2007, 3:43 pm

4. Careful of Tobin and his small cap winners. I own 27,000 shares of his most touted NEOM,Neomedia at $.12. Its been below $.04 forever.
   To make it worse their patents are being challenge by a consortium of electronic industry biggies. Ugh.

   [Reply]

   Posted by Anonymous | July 13, 2007, 3:47 pm

5. The best company out there in this space is Nichia. They own the patent on the white LED, and they stand to make a very large boatload of money from it. Unfortunately, they are privately held. Philips is already a very big player in this space–Lumileds ship more LEDs than anyone other company. Osram (Siemens)is also a big player.

   LED’s as general lighting have a very large technical barrier to overcome: heat. Yes, they are cooler than incandescents, but their brightness decreases as they get hotter–at 100c they are half as bright (or less) and their lifetime is seriously diminished.

   I have spent several years designing LED lamps for the automotive market, and the biggest challenge is to sink away the heat these things generate so the diodes themselves stay cool.

   My $0.02

   [Reply]

   Posted by Anonymous | July 13, 2007, 4:43 pm

6. LSGP has also been recommended at Botarelli Research Small Caps. Part of the Taipan financial publications. just thought you might like to know.

   [Reply]

   Posted by Anonymous | July 13, 2007, 5:02 pm

7. I examined LSGP’s third party marketing agreements. They are manufacturing private label lamps for Philips. Philips has bought out two other suppliers, CLRK and TRI, they were doing business with. If Philips continues true to form, they will takeover LSGP as well.

   [Reply]

   Posted by Anonymous | July 16, 2007, 3:38 am

8. Hi…I just built a super energy effiecent home and I have purchased every compact flourescent and every LED bulb made at this point…the BEST hands down are permlight.com…no-one mentions these guys…they don’t have all the bases covered yet…but their color temperature is right on…My wife and I work in Film, HD and Video, Live Events and my wife has been a lighting director since the 80’s…so we have the proper meters…and the eyes…there are a number of bulbs we have been seeing that are coming close…some are called warm white, but are greenish, some are pinkish…
   The New Dimmable Compact Flourscents from Neptun are great…no mercury…there are some dimmable R30 and R40 that are nice..and are using 75% less energy…the LED’s are much better yet…
   but it is getting closer than was noted…there are only a few places we have regular bulbs…because the LED or CFL are not color temperature correct for those lamps…sorry for the incorrect spelling..

   [Reply]

   Posted by Anonymous | August 17, 2007, 10:12 pm

9. This doggy sounds even sexier the more you learn…
   Cureently being sued by Philips for infringment of 5 patents combined with the resignation of the Vice-Chairman and Director.

   http://finance.yahoo.com/q?s=LSCG.OB

   [Reply]

   Posted by jacktheweed | March 14, 2008, 10:22 pm

10. This blog is great. wherelse can you learn details from industry pros like (Aug 17) “The New Dimmable Compact Fluorescents from Neptun are great…no mercury…there are some dimmable R30 and R40 that are nice..and are using 75% less energy…the LED’s are much better yet….’ All I need now is a heat outcomparison by , fluorescents. LEDs and Edison incandescants; we put all that eneryg INTO our living spaces as light and then spend as much (?) removing the heat. The better (mercury-free, colr-balanced) fluorescents are the answer, IMHO.

    [Reply]

    Posted by Ima_Nemisis | March 18, 2008, 2:58 pm

11. [...] Stock Gumshoe Investigates quot LEDs are the Future of Lighting quot Posted by root 17 minutes ago (http://www.stockgumshoe.com) The company currently has 25 patents in the led lighting space and a product reply to this comment posted by engineer79 july 12 2007 10 28 pm Discuss  |  Bury |  News | Stock Gumshoe Investigates quot LEDs are the Future of Lighting quot [...]

    Posted by Stock Gumshoe Investigates quot LEDs are the Future of Lighting quot | home lighting | June 13, 2009, 8:57 pm