Is it Cree's time to shine?

Analyst predicts the energy-efficiency trend will lift stagnant shares

In 1999, across the Triangle and the nation, owning technology stocks such as Cree bought bragging rights at cocktail parties and around water coolers.

Then the bubble burst. Cree shares, which had soared above $100, tumbled.

Since then, the Durham company's stock has risen and rolled several times but remained mostly in the $20-to-$35 range. Longtime investors are no better off than they were in 2000.

Thousands of local shareholders, including most Cree employees, have been waiting for a rebound -- and another chance to boast.

Now, at least one analyst bets that Cree's stock is finally poised to break out of a seven-year funk.

He predicts that the shares, up 60 percent since January, could reach $50, a level last seen at the start of the century. Fueling the optimism: surging interest in energy-efficient and environmentally friendly lighting products, a market that Cree has recently started to tap.

"Cree is a winner that has fallen from favor with investors," Andrew Huang, an analyst with American Technology Research in California, wrote in a recent report. "We believe in the coming years, Cree will return to its old highs."

Cree designs and makes tiny chips: light-emitting diodes. Cree's LEDs light cell phones, dashboards and some indoor and outdoor spaces. But the bigger payoff could come from packaging LEDs into the next generation of light bulbs.

"The evidence supporting the lighting market's transition to LED lighting is enormous," Huang wrote. Cree sales should "snowball over the coming years."

The company, founded by N.C. State University engineers in 1987, has grown into a global corporation with annual sales approaching half a billion dollars. It employs 1,300 locally, about half its worldwide work force. It's in the midst of a $300 million manufacturing expansion at its Durham campus, aided by state incentives worth as much as $5.1 million.

It's profitable, with little debt.

Along with Red Hat in Raleigh and SAS in Cary, Cree is one of the Triangle's most successful tech companies.

Its stock hasn't had the same success. Investors -- and the company -- still face challenges.

Revenue growth has slowed as customers that make cell phones and other devices buy fewer LEDs. Competition, especially from foreign rivals, has eroded market share.

At several points in recent years, Cree stock has climbed, only to crash again when earnings disappointed Wall Street.

The major difference this time is that the LED lighting market is ready to take off, said James Mullins, vice president of D.L. Carlson Investment Group in New Hampshire, which owns nearly a million Cree shares.

"The government supports it, the efficiency is compelling, and the desire from this country and the world to be energy efficient and environmentally friendly means LED is a good place to be for growth," said Mullins, who manages money mostly for long-term investors. "And Cree, because of its technology, will be a participant."

In March, the U.S. Department of Energy released a five-year plan -- in which Cree technology is repeatedly cited -- to fund the adoption of "solid-state" lighting, another industry term for LEDs.

Local governments, including the city of Raleigh, and big corporations such as Wal-Mart are testing LED lighting. Some countries such as Australia have gone so far as to schedule a ban on incandescent lights, which emit a glow that customers like but are grossly inefficient by comparison.

"The lighting revolution is beginning," said Cree financial chief John Kurtzweil. "I think we're sitting in a very good spot."