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So the Fed is continuing Operation Twist-whatever that means. Well, it does mean that interest rates will remain pinned to the floor. Was this what the market wanted to hear? Perhaps it provided some consolation, but QE3 would have been much more exiting. How this will play out, I can only leave to imagination. What I do know are stocks that will make great long-term investments.

I am not a trader. I would describe myself as more of a GARP (growth at a reasonable price) style investor that likes to make speculative plays in companies that I think will be well-established in the future. And for me, that's the exciting part of investing: knowing good value but also taking a gamble based on what you know now and applying it to the future. It's fun looking for these speculative stocks not only because its keeps me current on new trends, but there is also a potentially larger cash reward down the road--assuming you're right--than there is for well-established firms.

But for a young investor like me, it's not as simple as jumping into a trade you think will be profitable. Most of the trades I would like to execute require more capital than I have available. A simple spread on a stock like Seagate Technology (STX) or even the cheaper U.S. Airways (LCC), would significantly limit the rest of my investing potential. I'd rather be diversified. This narrows my investment arsenal to options: while intimidating to some, it's not a bad place to be. Options allow investors to get exposure to most of the stocks they want [except for maybe Apple (AAPL)] for a fraction of the money.

If you're a young investor with little funds (under 10k to play with), options provide a great way to diversify your portfolio, provided they are liquid enough, and they have finite risk.

Investing is all based on expectations. What's the company's EPS growth rates? This year? Next year? 5 year? Did it reaffirm its guidance? Are costs expected to increase? I could go on forever, but you get the point.

These expectations can range from dividend stalwarts, to classic GARP stocks, to high flyers that trade up on hype.

Over the next few articles in this series, I'll take two stocks at a time, one GARP, one speculative, and make the long case. I think by investing in solid companies, you can build a support base for your portfolio and make more speculative investments from that base. I will not be recommending specific trades, but I will give potential choices for investment.

First up are Cree Inc. (CREE) and Dana Holding Corporation (DAN).

CREE is a market-leading innovator of light products, LED components, and semiconductors for power and radio-frequency applications. It is known for making high-performance, high efficiency solutions. In the NASDAQ exchange, however, it's known for missing analyst's estimates - but, not by much. (CREE went public last year in September.)

The main challenge it face is driving the adoption of LED lighting, the main facet of the business. It is this transition that will spur business growth. Recent product advancements include doubling the number lumens per dollar, as well as setting a record R&D performance with a prototype LED with 254 lumens/watt. It has released 13 new products in 2012 alone, which seems to be keeping pace with previous years.

Advantages of LED lighting include: longevity, and lower energy and maintenance costs. Guaranteed to last 50,000 hours, that can be translated to 6 hours/day for 23 years. Furthermore, LEDs are versatile enough to be manufactured into all colors, shapes and sizes from the traditional hanging lights found in offices and warehouses to a modern art deco look for restaurants. So why hasn't CREE broken out?

LEDs have substantially higher up-front costs, even though the units are predicted to pay for themselves by reducing energy and replacement costs. Also, LEDs are brighter and more intense than incandescent light, which doesn't sit well with some folks.

With a wide range of applications from stadiums, grocery stores, parking lots, and office buildings to traffic signs, flashlights, and video screens, CREE needs to continue its persistently innovative nature to securely establish itself. Lighting is infrastructure, and it often comes down to winning big projects to establish the industry. CREE seems to be well aware of this and has launched a "Lighting the LED Revolution" tour across the country this summer and fall. It invites designers, architects, contractors, facility managers, distributors, buyers, project managers, etc. to view products and ask questions.

LEDs are the future. Provisions of the 2007 Energy Independence and Security Act will effectively ban 100 watt incandescent bulbs this year, 75 watt bulbs in 2013, and 30-40 watt bulbs by 2014. I believe CREE is an excellent long-term investment because it is leading this revolution to LEDs. It's speculative because the transition isn't complete.

Considering its recent stock correction of over 25%, now wouldn't be a bad time to enter a position. Its options aren't the most liquid, but entering a LEAP either Jan 13 or Jan 14, would allow you to sit on the position for a while. At-the-money Jan 13 $25 calls are going for about $4.00, while Jan 14 $25 is a little more at $6.80. Buying a LEAP also gives you time to add more funds to your brokerage account should you want to exercise the call to get long CREE if it takes off.

DAN is a solid company that's oversold and ready to be picked; it just needs to ripen off the vine for a few weeks or months, but it will get there. It specializes in drivetrain technologies, sealing systems, and thermal-management systems. It's well established with a broad customer base - more than 3,000 original-equipment and aftermarket customers in 125 countries; it has multiple market segments - light vehicle, heavy vehicle, and off-highway equipment; and a global engineering and manufacturing footprint with major facilities in 26 countries

Dana received 20% of its 2011 revenue from North America, 25% from Europe, 16% from South America, and 20% from the Asia-Pacific region. Light vehicles, including those made by Ford, Volkswagen, Chrysler, Nissan, and GM make up 41% of its revenue; heavy vehicles like highway trucks including Navistar, Volvo, PACCAR, and Daimler constitute 39%; and off-highway vehicles including Deere, Caterpillar, and AGCO are 20%. It is a well-secured manufacturer and innovator.

However, I should point out some of the risks. It has significant exposure to Europe and the recovering car industry.

Its PE is 9.46, its PPE is 5.75, and its 5-year EPS growth rate is 31.56%. Furthermore, it has delivered a positive earnings surprise for the last four consecutive quarters. It even produces a dividend that increased from 0.80% to 1.60% this year.

DAN is also a member of Sabrient's Baker's Dozen, 13 top stocks for 2012. In this portfolio, it's currently up nearly 7% so far this year.

The farthest out option month for DAN is Jan 13. The $14 calls look pretty cheap at $1.60 ($160/contract). Again, as with CREE, buying an option this far out (212 days to expiration) provides plenty of time for the stock to move, at which point you can sell the call profiting on the premium, or exercise the call to get long the stock.

This article is meant to initiate your own research. (Prices as of 6/20/12)

Source: Building The Portfolio For The Future With Cree, Inc. And Dana Holding Corporation

Additional disclosure: I'm looking to enter CREE and DAN shortly.