Going forward, I don’t expect Cree to slow down. The company has successfully negotiated the threat of bigger peers such as Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) and General Electric Company (NYSE:GE) so far as it is a pure-play LED company. Its focus on delivering great products at low cost has seen it win a number of lighting contracts across the globe. Moreover, the rapid growth in the LED lighting industry makes Cree a growth stock which investors should consider despite a high P/E ratio.
Cree shares received another boost last month after the company bumped up its guidance and introduced “game-changing” replacement bulbs which would spur adoption of LEDs. Its 40-watt replacement bulb for $9.97 could go a long way in driving its top line higher as it consumes 84% less energy and lasts 25 times longer. The company is set to report its next quarterly results later this month, and I won’t be surprised if its streak of solid performances continues.
Game on with this Giant
Chinese online gaming company Giant Interactive is one pick of mine of which I’m really proud. I’ve followed the company for almost a year now, and find it to be the best bet to ride the growth of online gaming in China. This is why I had expected it to turn in a giant performance this year, and it hasn’t disappointed me at all.
Giant has been growing its revenue and earnings at a fantastic pace, driven by the success of its games. The company has witnessed solid and consistent growth in its active paying accounts and average revenue per user, with both metrics improving 6.1% and 7.4% in the previous quarter, respectively. Giant has constantly improved its games and developed interesting new ones which have done well.
Its wide portfolio of games, coupled with growth across different platforms, including web games, micro-client games, and mobile, position it well to benefit from the proliferation of gaming in all forms. The company always has at least one great game in its portfolio to drive growth. While the ZT Online franchise has helped it rake in solid revenue quarter after quarter, new games such as World of Xianxia are expected to lift the top line to new highs.
The best part about Giant is that the company still trades at a cheap trailing P/E of 10 even after appreciating close to 25% so far this year. With more growth in the offing, Giant investors can expect the stock to rise further.
Final thoughts
These three stocks have done really well in the first quarter of 2013, and the strength of their businesses can take them even higher. While improved pricing trends and solid demand are tailwinds for Micron Technology, Inc. (NASDAQ:MU), rapid adoption and innovation should do the trick for Cree, and Giant’s addictive games and growth across different platforms can propel it to new highs.
As mentioned earlier, I focused on my best picks in this post. But we shouldn’t forget the laggards either, as they can always turn into leaders. Check back again in a few days to see if the laggards in my list can transform into leaders.
Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Giant Interactive Group.
