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Does Barack Obama Care if You Know This Company’s Name?

Scoping out the Oxford Club's Latest Lighting Teaser

By Travis Johnson, Stock Gumshoe, September 30, 2013

Um, no.

That’s just stupid.

But it is the subject line of the latest teaser pitch from the Oxford Club for their membership and their Communique newsletter — the subject reads, “The One Stock Obama Doesn’t Want You to Know About.”

Why? Well, it’s not even really implied in the ad message that follows — which is about the banning of incandescent light bulbs as a national energy-saving plan.

But they’re teasing a company that they say has the manufacturing chops to manufacture the new, more efficient light bulbs that will be needed more inexpensively. Is that what’s supposed to make President Obama want you to be “in the dark” about the name of the company? I don’t get it.

OK, fine, I do get it: The folks at the Oxford Club are no dummies, and if you say something inflammatory about President Obama in your subject line it means there’s a better chance that your email will be opened — particularly by the grouchy, older, relatively well-off white men who tend to be Republican, and who are the core readership for all investment newsletters.

It’s not just Obama, of course — they did the same thing with George Bush before him, and Bill Clinton before that. Apparently polarizing political figures make people want to open their email.

Does the President want the maker of efficient light bulbs to be secret? Don’t be stupid. If he thinks about them at all (I’m guessing he’s a bit too busy, frankly), he’s wanting the free market to do what the free market does: Allow room for innovation within a regulatory framework, and use regulations to spur demand for more energy efficient products (like tax breaks for Energy Star appliances, or auto fuel efficiency standards), which tends to help increase efficiency and lower prices as volumes climb.

But that’s beside the point — I just can’t resist a little blather. And yes, I know, you have strong feelings about Obama, or Bush, or light bulbs. If you insist on sharing those feelings, you can do so in the comment box below. Those feelings are irrelevant to the current teaser that I will get to starting … now:

“You may have heard that the government is banning the 100-watt light bulb… And very soon the 75-, 60- and 40-watt bulbs as well.

“Now, some people think that a light bulb is trivial, but we believe Americans can decide how to light our homes just fine on our own.

“And now the government is trying to take away our choices.

“But one small company is saving Americans from the dreaded ‘light bulb law’

“While competitors are lobbying to force Americans to buy their bulbs, this company has instead created a better bulb that consumers will want anyway.

“It’s competing its way to bigger profits, instead of lobbying for them.”

So who is this light bulb innovator? Apparently they’ve developed a product that is …

“… 78% more efficient than an ordinary bulb and lasts 25 times longer… Saving the average homeowner about $6,975.”

And it’s making the bulbs cheaper, we’re told:

“this company is changing the game…

“It’s developed a way to mass-produce the product and sell it much cheaper than anything on the market.

“Yet most American’s have never heard of the company… It’s a small manufacturer that’s seemingly coming out of nowhere.

“Though this company is less than 3% of the size of General Electric, its sales are growing seven times faster.”

Not a lot of clues, right? I can guess at the name just from the gist of the ad … but since they also include a chart showing how spectacularly this stock has done already, we can use that as a clue as well — here’s a clip of the chart:

creechart

Which means, sez the Thinkolator, this “secret” stock is … Cree (CREE).

Which, if you’ll notice that recent dip in the chart, scared the heck out of its investors on August 13 — not because the earnings were bad, they weren’t, but because it’s a pricey stock that’s been driven by the hot story of LED lighting, and the CEO gave what most are interpreting as lowball guidance.

And … well, that’s about all I know about CREE — this is the kind of company that often does well, with a huge market opportunity as lighting becomes more efficient and their LED bulbs achieve greater economics of scale and get more cost-competitive with fluorescent or halogen bulbs even before energy savings, but I don’t know much about the specifics of the market right now, the speed of the changeover, or the business itself.

They are trading at about 25X next year’s expected earnings, and analysts think their earnings will climb by 15-20% this year and next, so that’s reasonable — I guess the reason to buy this one is if you think the analysts are underestimating the growth potential and believe that their earnings growth will stay on the same torrid pace of the last year, if that’s how it works out then CREE is cheap. If the earnings growth slows down as is expected, it’s probably a little expensive.

I clearly don’t know enough about this one to buy or sell it, so I’ll toss it out to the great Gumshoe Faithful — what do you think? Did we get a buying opportunity when the stock fell 20% in August, or is it still too expensive? Let us know with a comment below.


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irvc
irvc(@irvc)
8 years ago

I HAVE OWNED CREE FOR SEVERAL YEARS. THIS PAST YEAR ITS PRICE HAS GONE FROM A LOW OF 24.50 TO A HIGH OF 76 AND IS NOW 60.19. THERE WAS A SELL-OFF THIS PAST AUGUST DUE TO THE COMPANY’S FIRST QUARTER EARNINGS GUIDANCE CAME IN ..BELOW ANALYSTS’ CONCENSUS ESTIMATES. IT IS A DECENT ENOUGH COMPANY WITH GOOD GROWTH PROSPECTS, NO LONG-TERM DEBT AND 82% OF ITS STOCK IS HELD BY INSTITUTIONS. IT PAYS NO DIVIDEND, HAS A HIGH TRAILING 12 MONTH’S P/E RATIO AND IS NOT RATED A BUY AT ITS CURRENT PRICE. I AM HOLDING ON TO MY STOCK AS I BELIEVE CREE HAS A BRIGHT FUTURE.

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blackjack
blackjack(@kbamfield)
8 years ago

yes keep buying the LED as its good for the rare earths market
thank you all

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Roy Cooper
Roy Cooper(@trevozah)
8 years ago

ROE 3.1%, PE 81.7 – Forget it

vivian lewis
vivian lewis(@vivianlewis)
8 years ago

A note from England where I am currently visiting. One thing you notice on the highways here is that there are solar panels over the lights and lit direction indicators–in rainy Britain. This eliminates the need to run wires alongside the road to light them. If the US ever gets out of its excessive and politicized fear of deficit spending and we start upgrading our infrastructure we might learn from the Brits about how to light the new roads we desperately need.
But first we have to resolve the sequester.
from a grumpy left-leaning senior female

Hank
Hank(@doc327hank)
8 years ago

In this discussion about LED lights I’d like to add a bit about things that are not commonly understood about them. And also other lighting options.

1) The LEDs them selves do not burn out. The power supply devices do. The power supply devices can be an issue. The LEDs that you simply screw into a socket, have a built-in power supply.

2) the LEDs do not fail like a incadecent bulb or flourecent, they get dimmer with time. So you have to replace them when they are only 90% or 80%, or 70% or some other % of their intial brightness.

3) I have had a very high % of the CFLs burnout much earlier than the normal life of an incandecent bulb. LIke 20 to 25%. Factor that in and they aren’t as inexpensve as they would seem at first.

4) CFLs are affected by low temerature. They sure would not work on our outside lights during the winter.

5) LEDs are not approtiate were the heating factor of the light is important, like traffic lights in the north, whcih rely on the heat from the lights to melt snow and ice and prevent condensation. But with the current legislation, someplaces may save to buy LEDs with supplemental heaters!!!!

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Hank
Hank(@doc327hank)
8 years ago

And in the Middle Atalntic States, there are quite a few solar panel powered devices along non-urban stretches of Interstate Highways. A simple case of economics. In fact that is were Photo-electric solar powere actually makes sense almost always: Remote locations, even in the north. .

mick
8 years ago

wouldn’t a equipment maker for LEDS and solar be a better play,such as vecco instructments (veco)/

Bob
Bob(@adamnb)
8 years ago

Cree was founded by the same guy (recently deceased) who also founded the long gone and failed company, World Com.

Harley
Harley
8 years ago

It was CREE. Great timing. Too bad I didn’t buy, the way it goes

budp
budp(@budp)
8 years ago

L can’t handle the spectral content of LED’s, Florescence’s, or Halogen lamps. So, I am on a buying spree of incandescent bulbs. Figure I have enough to last till I can’t remember what the problem was all about….

advantedges
advantedges(@advantedges)
8 years ago

So Travis, Have you seen the Oxford Club’s latest teaser from ALEXANDER GREEN regarding the TRADE of theCENTURY? Dear Oxford CommuniquĂ© Subscriber,

The gains are, in a word, staggering.

In late March 2009, at the depths of the global credit crisis, one man and his wife made a special kind of stock purchase.

To say they knew what they were doing would be a ridiculous understatement.

Because they’ve since made an average profit of $412,569 a day on that trade… every day, for the past four years! All told, their purchase is now worth over $600 million.

Some are calling it (not surprisingly) “The Trade of the Century.” Yet this man and his wife were not the only ones getting rich…

Just days after their transaction, Oxford Club Chief Investment Strategist Alexander Green urged his readers to make similar trades in their own accounts.

And if you had known how to complete this particular trade, you could have tripled your money in 28 days.

For Alex’s readers, this was no one-time fluke. Since Alex first started tracking these special kinds of trades in 2003, he’s averaged a 44% gain on all closed positions.

And if you’d started following Alex’s advice earlier this year, to date you could have seen overall gains of up to 2,318%. That’s enough to turn a stake of just $2,500 into a $60,450 windfall.

Start making these trades today, and we believe you could make up to $15,735 every month – for the rest of your life.

To find out what’s behind Alexander’s “Trade of the Century” strategy, and what makes it so successful, just go here.

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TexasJB
TexasJB
8 years ago

Could this be another plug for the put selling strategy?

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who noze
who noze(@lenk519)
8 years ago

botton line LET THERE BE LIGHT

TOM C.
TOM C.(@keelfoot)
8 years ago

CREE has been a leader in LED technology for a very long time, but I have been disappointed in the company’s inability to convert its technological advantages into a business model that works. Look at the smallest typical lightbulbs… those used for flashlights. Look into the specs for those super high tech and incredibly expensive “tactical” flashlights, including those that attach to the barrel of a gun, and you will probably find a Cree LED as the source of light. High efficiency, high durability, low power consumption, and rendering of precise spectra combine into one brand,,, Cree. I fianally found a superb D cell (3) flashlight for 25 bucks at Autozone (the “Max”) that is the best bang for anyone’s buck out there. Fantastic power and perfect light pattern etc. What matters here is that it uses a Cree 5 watt LED. I only mention it here, because if you check this out you will quickly see what is important about Cree – it makes the best LEDs. HOWEVER, it does not make the best investment. Too bad, because the world would benefit from a flood of superior products from Cree.
Tom

PS: If you are into short term (weeklies) covered call writing, as in an IRA, CREE can be a good vehicle. Just need to watch the trend c