» The Nexxus (Nasdaq: NEXS) of the LED Universe

The Nexxus (Nasdaq: NEXS) of the LED Universe

May 25, 2007 on 8:18 am | In Short Term Picks |

BUY NEXS near $4.95

Nexxus Lighting Inc. (formerly Super Vision International) designs, manufactures, and markets light-emitting diodes (LEDs) and fiber optic lighting products. Nexxus products are primarily used for commercial, architectural, and signage applications.

Recently, companies focusing on LED lighting have seen dramatic moves in their stock prices due to legislation banning the use of incandescent bulbs resulting in increased investor attention. Color Kinetics (Nasdaq: CLRK) and Wall Street Mayhem pick Cree Inc. (Nasdaq: CREE) have seen their stock prices jump 30% and 15% respectively in the last two weeks. Although Nexxus is a more speculative pick than Cree or Color Kinetics, Nexxus should also benefit from the growing demand for LED lighting and the recent increased investor attention on the LED sector.

Nexxus manufactures and sells the Savi line of LED bulbs with True White Technology. The Savi line of LED bulbs reduce energy costs by about 75% and they last 15 to 25 times longer than traditional incandescent bulbs. Savi LED light bulbs are designed to last up to 5 years when operated continuously. Unlike fluorescent lighting, the Savi LEDs produce clean white light and they are environmentally friendly because they do not contain mercury and they require no special disposal procedures.

In December of 2006 Nexxus reached a comprehensive settlement with Color Kinetics over patent infringement issues. Nexxus agreed to pay Color Kinetics a settlement fee and Nexxus was granted a royalty bearing license allowing Nexxus to continue manufacturing and selling certain LED lighting systems including the Savi line of LED bulbs. As part of the settlement Nexxus also granted Color Kinetics a royalty free license to the LED patent #4,962,687 owned by Nexxus. Although Nexxus had hoped to emerge from these court proceedings with a clean patent portfolio, the settlement allows Nexxus to continue manufacturing and selling the Savi LED line while paying reasonable royalty rates. In the first quarter, gross margin dropped from 43% to 41% after the company started paying royalties to Color Kinetics.

On March 31, Nexxus released financial results for the first quarter of 2007. Total revenue was down 10% from the first quarter of 2006, but revenues in the commercial lighting division were up 30% due to increased LED sales. The decrease in total quarterly revenue was due to a decrease in sales in the pool and spa market. However, sales of commercial LED lighting systems were strong and the company forecast continued rapid growth in this sector.

Although Nexxus is a small company that is currently not profitable, it is well positioned to benefit from increasing demand for LED lighting solutions. In late March, Nexxus moved to a larger more cost effective manufacturing facility and the Nexxus Savi line is one of the first complete lines of LED light bulbs that can be used in existing lighting systems as well as new construction.

Legislation banning incandescent light bulbs is picking up steam sending shares of Color Kinetics and Cree significantly higher. Although Color Kinetics and Cree are the obvious investment choices to take advantage of the growing demand for LED lighting, as investors continue to focus on environmentally friendly LED lighting solutions, shares of Nexxus have the potential to realize gains similar to those recently seen in Color Kinetics and Cree.

Nexxus is a risky investment, but the current media and investor attention focused on LEDs could propel shares higher. For investors that are new to LED companies, Cree and Color Kinetics are safer investments, but for those investors that have already profited from Cree and Color Kinetics, we recommend taking some profits on CREE and CLRK and moving the proceeds into Nexxus.

Full disclosure: Wall Street Mayhem is long NEXS, CREE, and CLRK

28 Comments »

RSS feed for comments on this post. TrackBack URI

The only type of small, in-the-red companies I like to invest in are those who have good existing products, solid margins, and a compelling reason for sales volume to increase in the not too distant future. A wave of anti-incandescent lighting legislation is probably coming, so NEXS has some potential. Too bad there are no options on NEXS. Since they just announced an acquisition, I wouldn’t expect them to suddenly announce bankruptcy. So… Pretty good upside potential and hopefully near-term downside is only that they don’t see a run-up on the recent LED hype. I think it’s worth a shot. It has a miniscule market cap, and this environment is good for sales to really ramp up.

Comment by Prince Andrei Bolkonsky — May 25, 2007 #
What is the market cap for NEXS?

Comment by TraderJoe — May 25, 2007 #
The market cap is $36 million. I just sold CREE yesterday so I’m taking a look at NEXS today. Looks promising, but there is not much info out there on NEXS.

Comment by Pligg — May 25, 2007 #
Mkt cap is 35.97 million according to Google.

Comment by Prince Andrei Bolkonsky — May 25, 2007 #
I’ve been holding NEXS for about a year now and it has been a great investment. I haven’t been able to find an active message board anywhere for NEXS, so I’m hoping this will turn into the NEXS message board. I’ve been telling people on the CLRK and CREE message boards about NEXS for a long time, but the people on those boards are typically not interested in talking about NEXS. Nice write up, but you guys left out what I think is the most important thing. NEXS has a portfolio of patents related to next generation fiber optic lighting. It is these patents that make NEXS a great investment because there is a good chance that NEXS will be able to charge royalties to other companies for these patents just like CLRK does for LEDs.

Comment by Jorge — May 25, 2007 #
CREE and CLRK seem to be holding onto their recent gains, and NEXS just keeps inching upward on tiny volume. Odd that there is no Yahoo message board. I’d like to have a better idea how many people are watching this stock.

Jorge, where can we get information about those patents?

Comment by Prince Andrei Bolkonsky — May 30, 2007 #
Thank you Wall Street Mayhem and thank you NEXS and CREE. Thanks to these 2 trades it is goodbye Honda Civic, hello Lexus ES350. Your timing was utterly amazing on both of these picks.

Comment by Jerry — June 1, 2007 #
Jerry, I’m not quite to the level of a new car for these 2 trades, but I am up 30% on CREE and over 20% on NEXS. I doesn’t get any better than that in about 3 weeks.

Comment by TraderJoe — June 1, 2007 #
Looks like you guys sold a little early. I just sold half for $6.55.

Comment by Mary — June 21, 2007 #
sweet site man 10x red vs blue on you tube

Comment by red tube — July 15, 2008 #
good work great site thanks os x video driver

Comment by xvideo — July 16, 2008 #
cool site dude 10x is pornhube free

Comment by pornhube — July 16, 2008 #
Buy rohypnol.

Buy rohypnol.

Trackback by Buy rohypnol. — July 17, 2008 #
Soma.

Soma next day. Fatal dose of soma carisopradol. Soma muscle relaxant. Soma to florida. Psyche and soma operate as a duality. Soma. Buy soma online. Best online pricing for soma.

Trackback by Soma online sales. — July 26, 2008 #
rML3Qu hi! hice site!

Comment by nick — July 27, 2008 #
cool site 10x dude zoo tube 369

Comment by zoo tube 365 — July 28, 2008 #
gdfgdsfgdsfg free xxx porn hub

Comment by porn hub — July 29, 2008 #
oACJlX hi! hice site!

Comment by nick — July 29, 2008 #
cool post great work thx family fany sexvideos

Comment by xvideos — July 31, 2008 #
wow cool site dude 10x ;) see u animal sex tube blogers

Comment by animal sex tube — July 31, 2008 #
nice work man 10x

Comment by Ngxdbkjv — July 31, 2008 #
hgfhf hgfh dfhf hhj gfjhg jdsfghf gjhgj gfhj ghj underage porn hot

Comment by underage porn — July 31, 2008 #
Danger of ephedrine.

Ephedrine. Ephedrine plus danger of ephedrine. Vaspro ephedrine. Ephedrine side effects. P-ephedrine- guaifen la ta.

Trackback by Ephedrine. — August 5, 2008 #
Soma to florida.

Soma to florida.

Trackback by Soma intimates stores. — August 20, 2008 #
Color Kinetics works good, in my old job i used to install them, but if you ask me, they are too expensive. There are many alternatives available, which are also great in quality and worthy of investment.

Comment by Denny — July 2, 2009 #
comment3

Comment by Iprairwp — November 7, 2009 #
comment4

Comment by Tpcuvqdo — November 7, 2009 #
270_112.txt;8;12

Comment by SMPLBZEnpvVtQyL — November 18, 2009 #

Categories:

Subscribe in a reader