Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Cree, Inc. (CREE), General Electric Company (GE): This Stock’s Recent Drop Is a Buying Opportunity

Page 1 of 2

Light-emitting diode manufacturer Cree, Inc. (NASDAQ:CREE) cratered earlier this month after the company’s first-quarter guidance came in below consensus estimates. The company has been on a stellar run so far this year, but lost 20% of its market capitalization in a single day, even though it witnessed terrific growth in its earnings and revenue.

Cree, Inc. (NASDAQ:CREE)

However, Cree, Inc. (NASDAQ:CREE) is a pure-play LED lighting company, and so, the recent drop looks like a good opportunity for investors to add to their positions. According to a McKinsey report, the worldwide LED lighting market will be worth $94 billion by 2020, making for 60% of the overall lighting market . And being a specialized player in this industry, Cree, Inc. (NASDAQ:CREE) is in a good position to benefit from this opportunity and has done well so far.

CREE Revenue TTM Chart

CREE Revenue TTM data by YCharts

A minor hiccup
Since it is a fast-growing company, Cree, Inc. (NASDAQ:CREE) is expected to have fluctuating margins as it invests in growth. The important point to consider right now is revenue growth, and the ascending revenue curve suggests that Cree, Inc. (NASDAQ:CREE)’s products are finding takers.

The recent revenue guidance of $380 million to $400 million — against the consensus estimate of $398.4 million — might have been a dampener on the stock price, but the long run still looks promising .

Cree, Inc. (NASDAQ:CREE)’s backlog for the ongoing quarter is better than the preceding one. Going forward, management sees the shift to LED lighting as a strong tailwind and is ramping up sales of its LED bulb. Sales of its lighting products had increased 48% in the previous fiscal year to $500 million as LED adoption improves and the company expects this trend to continue in the future .

Cutting-edge products
Cree has been undercutting bigger players such as General Electric Company (NYSE:GE) with its 40-watt replacement LED light bulb, which sells for under $10 . In comparison, General Electric Company (NYSE:GE)’s 40-watt replacement bulb sells at a much higher price point of around $25 on Amazon. Moreover, while General Electric Company (NYSE:GE)’s light delivers the same 450 lumens as Cree’s offering, it consumes 50% more electricity.

Page 1 of 2
Loading Comments...