Obama Provides More Tailwinds for LED Lighting Manufacturers

One of Barack Obama's points in his stimulus package speech last Thursday was about making 75% of federal government buildings more energy efficient. It was a line that was easy to pass over as high-minded politician-speak but making all those government buildings "more efficient" could be as easy as changing the light bulbs. It reminded me of something that Jon Najarian was talking about a week earlier. See the video here. To recap some of the energy efficient and green characteristics of LED (Light Emitting Diode) bulbs....

• They use 40-70% less electricity according to the LED City Project.
• On average they burn up to 70,000 hours as compared to a life span of only 20,000 hours with more traditional incandescent or fluorescent bulbs.
• They put-off less heat and therefore a building's air conditioning system can provide cooling more efficiently while using less electricity.

Obama also should love the idea because LED bulbs are environmentaly friendly for two reasons.

1. There are likely to be changed far less often.
2. Traditional flourescent bulbs contain mercury and are treated as hazardous waste when it comes time to get rid of them. LED bulbs contain no mercury and are thus friendlier to the environment and hazardous disposal fees don't apply.

The two companies that Jon Najarian recommended for a bullish play on the future of LED lighting are Philips Electronics (PHG) and Cree, Inc. (CREE). To show that the market is catching on to the up-side possibilities, PHG and CREE both recently broke above their 50 day moving average.

If you have a preference to support American companies, Cree is based in North Carolina while Philips is based in Amsterdam. A recent press release by Cree highlights an upcoming project that will see 4,200 of their LED light fixtures installed in a section of the Pentagon that is undergoing renovation.

In choosing between the two companies, I would have to lean towards an investment in Cree because of the Pentagon project that they will soon have under their belt. More federal government buildings, potentially thousands more, seem to be a realistic new market for Cree now thanks to the new administration's upcoming stimulus package.

Disclosure: No position held