The optical properties of a new class of composite nonlinear materials composed of coated grains, such as cadmium sulfide with a silver coating, are examined. These materials exhibit intrinsic optical bistability and resonantly enhanced conjugate reflectivity. The threshold for intrinsic optical bistability is low enough for practical applications in optical communications and optical computing. Some problems associated with the fabrication of these materials are addressed. Based on preliminary results, switching times are expected to be in the subpicosecond range.