Readers of my articles are well aware that I'm a fan for energy efficiency in general, and efficient lighting in particular as good investments, as more and more people and companies reduce their energy use to lower costs and green their image. With the exception of niche players such as Cree and Lighting Science, efficient lighting is dominated by General Electric (NYSE:GE), Osram Sylvania (a division of Siemens (SI)), and Koninklijke Philips (PHG.) I'm a fan of all three of these companies, and both GE and Siemens are honorable mentions in this series.
While Siemens and GE are broad industrial conglomerates, smaller Philips is comparatively focused on electronics, with lighting being one of just four divisions. Last June, I told readers about my hunch that Philips was "the most serious [of the] lighting manufacturers about pursuing LEDs." That hunch was quickly confirmed when Philips announced the acquisition of LED company Color Kinetics a couple of weeks later. That acquisition was followed in November by Philips' announced acquisition of Genlyte, with the apparent intention of using this lighting fixture manufacturer to increase their US market penetration.
These two acquisitions allowed the much smaller Philips (market cap $42B) to surpass the more diversified GE ($363B market cap) as the leading lighting manufacturer in both North America and the world as a whole. For investors who worry that a possible US recession might turn consumers' and companies' attention away from clean energy, energy efficient lighting is the perfect choice in a more budget conscious green era. Commercial lighting retrofits often have payback periods of less than a year, and so are likely to appeal to companies seeking to reduce costs.
Philips' other businesses include medical devices and consumer products. Not much about them seems particularly green, although they recently announced an LED-backlit "Eco-TV," which may appeal to the green aspiring couch potato. It received faint praise from the green technorati, since a big new TV (even a relatively energy efficient one) is likely to be a lot more wasteful than the smaller TV you already have. On the other hand, the Eco-TV may be the start of a strategy within Philips to leverage their lighting expertise to their consumer electronics business.
In any case, the lighting business is worth having in your portfolio, especially if a market collapse provides an opportunity to buy it on the cheap.
DISCLOSURE: Tom Konrad and/or his clients have long positions in PHG, GE, SI.