Incandescent Bulbs Now Banned: Is There An Investment Play?

The incandescent light bulb ban is a federal regulation that went into effect on August 1, 2023. The ban prohibits the manufacture and sale of most incandescent light bulbs in the United States. The ban was put in place to promote energy efficiency and reduce carbon emissions.

What is banned?

The ban applies to most incandescent light bulbs, including:

  • A-shaped bulbs (the most common type of incandescent bulb)
  • B-shaped bulbs (used in recessed lighting)
  • C-shaped bulbs (used in table lamps)
  • MR-16 bulbs (used in track lighting)

What is not banned?

The ban does not apply to all incandescent light bulbs. The following types of incandescent bulbs are still allowed to be manufactured and sold:

  • Specialty bulbs, such as flame-shaped bulbs and decorative bulbs
  • Incandescent bulbs used in certain appliances, such as ovens and toasters

Why was the ban put in place?

The incandescent light bulb ban was put in place to promote energy efficiency and reduce carbon emissions. Incandescent light bulbs are very inefficient, meaning that they use a lot of energy to produce light. By banning the sale of incandescent light bulbs, the government hopes to encourage people to switch to more energy-efficient light bulbs, such as LED bulbs.

What are the benefits of the ban?

The ban on incandescent light bulbs is expected to have a number of benefits, including:

  • Reduced energy consumption: LED bulbs are much more energy-efficient than incandescent bulbs, so the ban is expected to lead to a significant reduction in energy consumption.
  • Reduced carbon emissions: The reduction in energy consumption will also lead to a reduction in carbon emissions.
  • Increased consumer savings: LED bulbs are also more affordable than incandescent bulbs, so consumers are expected to save money on their energy bills.

What are the drawbacks of the ban?

There are a few potential drawbacks to the ban on incandescent light bulbs, including:

  • Higher upfront costs: LED bulbs are more expensive than incandescent bulbs, so consumers may have to pay more upfront to switch to LED bulbs.
  • Not all LED bulbs are created equal: There are a wide variety of LED bulbs on the market, and not all of them are created equal. Some LED bulbs are not as bright as incandescent bulbs, and others may not last as long.
  • Consumer education: Consumers may need to be educated about the benefits of LED bulbs and how to choose the right LED bulb for their needs.

Overall, the ban on incandescent light bulbs is a step in the right direction towards promoting energy efficiency and reducing carbon emissions. However, there are a few potential drawbacks that consumers should be aware of.

The global market for LED bulbs is expected to grow at a CAGR of 15% from 2022 to 2027. So is there an investment play here?

Acuity Brands (AYI) is a prominent company in the lighting industry, particularly known for its expertise and innovation in LED lighting solutions. Here is a profile of Acuity Brands with respect to LED lighting:

Company Overview: Acuity Brands, Inc. is a leading provider of lighting solutions and building management systems. Headquartered in Atlanta, Georgia, USA, the company was founded in 2001 and has since grown to become a major player in the lighting industry. Acuity Brands operates through various subsidiaries and brands to offer a wide range of lighting products and solutions for commercial, industrial, institutional, and residential applications.

Expertise in LED Lighting: Acuity Brands is recognized for its strong focus on LED lighting technology. LED (Light Emitting Diode) lighting is known for its energy efficiency, long lifespan, and eco-friendliness. Acuity Brands has invested significantly in research, development, and manufacturing capabilities related to LED lighting. Their products include LED fixtures, lamps, and integrated lighting systems that cater to various indoor and outdoor lighting needs.

Innovation and Product Range: Acuity Brands is known for its innovative approach to lighting solutions, leveraging the latest advancements in LED technology, IoT (Internet of Things), and smart lighting systems. They offer a diverse portfolio of LED lighting products that cover architectural lighting, commercial lighting, industrial lighting, roadway lighting, and more. These products often feature advanced controls, allowing users to optimize lighting settings and reduce energy consumption.

Sustainability and Energy Efficiency: As a leader in the LED lighting industry, Acuity Brands places a strong emphasis on sustainability and energy efficiency. LED lighting is inherently more energy-efficient than traditional lighting technologies, and Acuity Brands promotes its adoption to help customers reduce their carbon footprint and energy costs.

Market Presence: Acuity Brands has a significant presence both in the United States and globally, serving a wide range of customers including businesses, governments, and individual consumers. They collaborate with lighting designers, architects, and electrical contractors to provide customized lighting solutions for various projects.

This $5.12 billion market cap stock trades at 14 times trailing earnings and 12.5 times forward earnings. The Price to Earnings Growth {PEG] ratio is a reasonable 1.12. Earnings per share growth this year were up an incredible 32.4%. The company pays a dividend, although a small one, giving a yield of 0.31%.

LSI Industries (LYTS) is a well-established company in the lighting industry, particularly recognized for its expertise and focus on LED lighting solutions. Founded in 1976 and headquartered in Cincinnati, Ohio, USA, LSI Industries has grown to become a leading provider of high-performance lighting products and integrated lighting solutions.

The company’s business with respect to LED lighting centers on its strong commitment to innovation and sustainability. LSI Industries has been at the forefront of adopting LED technology, capitalizing on its energy efficiency, long lifespan, and environmentally friendly characteristics. They have invested significantly in research and development to design cutting-edge LED lighting fixtures, lamps, and integrated systems that cater to a wide array of applications, including commercial, industrial, outdoor, and architectural lighting needs.

LSI Industries’ LED lighting offerings are known for their reliability, durability, and advanced features. They often incorporate smart lighting controls and IoT capabilities, allowing customers to optimize energy usage and achieve substantial cost savings. Moreover, the company places a strong emphasis on sustainability, striving to reduce its environmental impact and help customers meet their energy efficiency goals.

With a robust market presence in North America and beyond, LSI Industries collaborates closely with lighting designers, architects, contractors, and facility managers to provide tailored lighting solutions for various projects. Their customer-centric approach and dedication to quality have earned them a reputation as a trusted partner in the lighting industry.

The company has a $3,57 million market cap, a trailing price to earnings ratio of 16 and a forward P/E of 12.5. The PEG ratio is a very favorable 0.64, and the price to sale ratio is also an excellent 0.61. Earnings per share this year skyrocketed by 151.1%. The stock overs a yield of 1.6%.

Energy Focus (EFOI) is a notable company in the lighting industry, particularly known for its specialization in LED lighting products and solutions. Founded in 1985 and based in Solon, Ohio, USA, Energy Focus has positioned itself as a leading provider of energy-efficient LED lighting technologies for a diverse range of applications.

Energy Focus’ company business centers on its strong commitment to sustainability and environmental responsibility. The company is dedicated to designing and manufacturing high-quality LED lighting solutions that promote energy conservation and reduce carbon emissions. By focusing on LED technology, Energy Focus aims to offer lighting products that have longer lifespans and consume significantly less energy compared to traditional lighting options, helping businesses and consumers alike to reduce their energy costs and overall environmental impact.

One of the key areas of expertise for Energy Focus is in providing LED lighting solutions for various commercial, industrial, and institutional applications. Their product portfolio includes a wide range of LED fixtures, lamps, bulbs, and lighting systems, designed to meet the unique needs of different sectors and industries.

Moreover, Energy Focus has developed a niche in providing military-grade LED lighting solutions. They have secured contracts with the U.S. Navy to supply their LED lighting products for naval vessels and submarines. This highlights their reputation for producing rugged and reliable lighting solutions capable of withstanding challenging environments.

As a company committed to technological advancement, Energy Focus continues to invest in research and development to stay at the forefront of LED lighting innovation. They strive to integrate the latest advancements in smart lighting controls and IoT capabilities into their products, enabling users to optimize lighting efficiency and performance further.

With a presence in both domestic and international markets, Energy Focus collaborates with a wide range of customers, including businesses, government agencies, and consumers, to deliver tailored LED lighting solutions that address their unique requirements. Their focus on energy-efficient, environmentally friendly lighting technologies has established Energy Focus as a trusted and forward-thinking player in the LED lighting industry.

This is an extremely low cap company at $5.27 million, and should be considered extremely speculative. The stock is currently generating negative earnings, but does have a reasonable price to sales ratio of 1.12. The company does not pay a dividend.

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