The third name in my list of the top 25 stocks for the NEXT 25 years (again, in no particular order) is Color Kinetics (NASDAQ: CLRK). This Boston-based company has the opportunity to redefine the world of lighting -- a massive market. Color Kinetics closed at $21.55 and currently sports a market capitalization of $459 million. Color Kinetics has $100 million of cash on its balance sheet. My estimates for this year call for revenues of $85 million and earnings per share of $.44-.47 and for 2008, revenues of $110-112 million and earnings per share of $.65-.67.
Color Kinetics makes intelligent solid-state lighting systems using light emitting diodes (LED). The company has 68 awarded patents in its portfolio with another 100+ applied for. The intellectual capital that Color Kinetics possesses is becoming extremely valuable. Its business model is to directly sell lighting systems, from architectural design to implementation, to licensing its technology, to third party partners.
The world of lighting is undergoing a revolution and Color Kinetics is emerging as one of the de facto leaders. The traditional incandescent light bulb is going the way of the horse and buggy. The incandescent bulb uses far too much energy to operate efficiently, and the lifespan is limited to normally a couple of thousand hours. LED lighting, not yet economical for mainstream homeowners, is winning in the commercial world. Color Kinetics systems are the choice for casinos, theaters, new commercial building projects, and street lighting. The technology included allows the customer to change the color of the lights from pure white to an array of different colors. The physical beauty of the systems are awe-inspiring.
The benefit to the customer is the huge savings on the electric bill. Color Kinetics lighting systems can save the customer between half to two-thirds in energy costs. This company is fast becoming associated as an alternative energy play. As the technology becomes more simplified, the next logical market is the residential; homes, condos and apartments. Currently Color Kinetics has been incorporated in the exterior and common-space lighting of new apartment/condominium projects, but has yet to invade the homeowners lamps! They will.
The company has a rich portfolio of proprietary products protected by granted patents. The company's mission is to become the standard for lighting systems worldwide. The market place is measured in the mega-billions of dollars. Ford Motor Company (NYSE: F) has just signed a contract with Color Kinetics to develop all the dashboard lighting systems. This application, when developed and completed, could open the flood gates for Color Kinetics in the automotive and aerospace industries.
Color Kinetics is slowly but surely changing the way the world turns on its lights. The opportunity and the market appear to be heading directly in sync. This company has a chance to become a mega-billion dollar market capitalization stock with strong earnings growth.
Georges Yared is the CIO of Yared Investment Research. For more growth stock ideas visit the website.
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Reader Comments (Page 1 of 1)
5-05-2007 @ 9:57PM
Alan B said...
I agree with you 100%. I would add that in addition to energy savings, there are maintenance costs that are avoided as well. There is a huge bake-off between CLRK and PHG for the Empire State Building.
For anyone who is interested in this stock, one of the three in which I have my kids' college funds invested, you should check out their website to visualize what is going on. http://www.colorkinetics.com.
I submitted an article in February when the stock was just north of 19 - the stock has more to go... http://smallcap.seekingalpha.com/articles/27427