Overlooked Energy Efficiency Stocks: LED Lighting and Lighting Control Stocks AYI, LSCG and BBLU

Given increased concerns over the high cost of energy and energy efficiency, it might be time for investors to take a closer look at light-emitting diodes (LED) lighting and lighting control stocks such as Acuity Brands (NYSE: AYI), Lighting Science Group Corporation (OTC: LSCG) and Blue Earth (OTC: BBLU). Specifically, the lighting controls market in North America and Europe is projected to reach US$3.8 billion by the year 2015 as energy efficient lighting along with lighting controls are essential components for energy efficient lighting systems and energy efficient buildings or facilities. In fact, Europe by far represents the biggest market for lighting controls technology but energy efficiency programs by state and federal governments in the USA that compel installation of energy saving lighting systems also represents a huge market. Hence, should you consider investing in lighting and lighting control stocks like Acuity Brands (AYI), Lighting Science Group Corporation (LSCG) and Blue Earth (BBLU)? Here is a closer look at all three to help you decide:

Acuity Brands (NYSE: AYI)

Acuity Brands is a provider of lighting fixtures, control devices, components, systems and services for commercial and institutional, industrial, infrastructure and residential applications for various markets throughout North America and select international markets. Investors should be aware that director Norman Wesley acquired 3,500 shares of Acuity Brands on the open market on October 25 for $45.42 a share. And while its almost always a bullish sign when an insider is buyer, this is not a clear cut case as Wesley was actually buying shares in order to fulfill his stock ownership requirements as a director. Hence, investors should note that Acuity Brands reported that fiscal 4Q2011 sales rose 12% year-over-year to $496.2 million while net income rose 26% to $34.2 million. Analysts have noted that Acuity Brands’ focus on fixtures with light-emitting diodes (LEDs) will help it grow faster than rivals but LED lighting is also more expensive that other lighting fixtures and have lower profit margins (probably because they last longer – a real catch 22). On Monday, Acuity Brands fell 1.95% to $50.36 (AYI has a 52 week trading range of $33.13 to $61.45 a share) for a market cap of $2.12 billion.

Lighting Science Group Corporation (OTC: LSCG)

Lighting Science Group Corporation designs, develops, manufactures and markets general illumination products that use light emitting diodes (LEDs) as their light source. Late in October, Lighting Science Group Corporation announced that it had received more than $100 million in LED lighting product orders for the year — a 100%+ revenue increase compared to the same time last year. Otherwise, investors should note a recent article in Forbes where it was mentioned that Lighting Science Group Corporation has made LED lights for testing circadian rhythm impacts for both NASA and aircraft engineers and is currently working with Google on a bulb that can dim and brighten as you approach with an Android phone. However, Lighting Science Group Corporation has lost close to half its value since the start of year and on Monday, it closed $1.80 (LSCG has a 52 week trading range of $1.65 to $5.39 a share) for a market cap of $363 million.

Blue Earth (OTC: BBLU)

Blue Earth is an interesting and off the radar lighting play. Specifically, Blue Earth’s founders are undertaking a roll-up type of mergers and acquisition strategy in order to acquire, license, develop, market, install and monitor clean tech related technologies and energy management systems. Blue Earth is targeting companies with technologies that are designed for a specific customer or facility in the company’s target market of small commercial business and residential customers who want to improve the efficiency of various building systems such as refrigeration, ventilation, lighting, air conditioning and heating. On the lighting side, Blue Earth has acquired the exclusive private label and manufacturing rights to a patented lighting controls technology that is based on distributed intelligence and embeds a microprocessor to control the “switch” inside a fluorescent ballast. This microprocessor then controls each individual fluorescent tube in either an “on/off” state by using the existing wall switch to send instructions to the “smart ballast.” Moreover, each fluorescent tube can be optionally controlled by a wireless device (such as a computer) in order to control a network of lights at a facility. Since Blue Earth also owns Castrovilla, Inc., which has an energy efficiency retrofit model and is expected to generate more than $20 million in revenues plus EBITDA in excess of $3 million in 2012, along with Xnergy, a provider of energy solutions which includes the design and implementation of energy savings projects, it has a ready market of customers for its lighting projects. On Monday, Blue Earth fell 3.33% to $1.45 (BBLU has a 52 week trading range of $0.81 to $2.30 a share) for a market cap of $27 million.

The Bottom Line. Investors with some tolerance for risk when it comes to investing in new but growing industries would be well advised to take a closer look at light on lighting and lighting control stocks Acuity Brands (AYI), Lighting Science Group Corporation (LSCG) and Blue Earth (BBLU).