The current market concerns over European debt have hit clean energy hard. YTD and over the last 365 days returns for all elements of the clean energy segment, with one exception, have been poor. Excess returns (i.e. alpha) have been negative across the spectrum except for the LED technologists.
I identified a group of companies in 2008 that were pursing LEDs as their primary business. Their businesses seem to be growing and, of all the clean energy sector I track, they are the only ones with positive excess return over the S&P 500.
Despite popular conceptions that LEDs are significanly more efficient then CFLs, their form factor, ruggedness, and longevity are translating into successfull products. And successful products are what create value for long term investors. Just look at Apple (AAPL), where the iPhone is now over 40% of its business in just a few years! I don’t think there is a breakthrough like that in the LED business but there is a pathway (efficiency improvement and cost reductions) that can make this lighting solution compelling.
Disclosure: No positions