Who is Enphase Energy?
In case you missed it, Enphase Energy, Inc. is a provider of energy management solutions. It is engaged in designing, developing, manufacturing and selling microinverter systems for the solar photovoltaic industry. Basically, Enphase designs and manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.
This is been one of the hottest modern energy stocks in the last few years, but its rapid growth and insane volatility have made it impenetrable to many investors who missed the first gap up. On 5/19, ENPH hit a high of $70.36 before tumbling down to its current price of $56.42.
Why would you want to invest?
There are a few sides to this story. The business grew annual revenue from $286 million in 2017 to $624 million in 2019. In that short span, gross profit jumped 294% and an operating loss of $39 million swung to an operating profit of $102 million.
Profitable growth of that magnitude is pretty rare, which helps to explain why investors have generally placed a steep premium on the shares. Enphase Energy is valued at $8.4 billion and 12.4 times trailing sales. The stock has gained 9,540% in the last three years. Not bad.
Then why is it down?
The recent loss is hard to narrow down. The stock's biggest slide followed a report Wednesday that investor research firm Institutional Shareholder Services EVA had downgraded Enphase rival SolarEdge Technologies (NASDAQ:SEDG) from buy to overweight.
There is also the issue that Enphase’s products are manufactured by Flex in China, and since September have faced 10% tariffs imposed by the Trump Administration under the Section 301 case.
The reason I believe now is the time to get in
Aside from the obvious that it has hit its lowest point in a week, is that Enphase is currently employing a $200 million stock share buyback program. These programs immediately inflate the value of the remaining shares. Most likely, ENPH will show a quick turnaround this week and it's hard to predict when it will fall to these levels again.
Aftermarket activity shows trading around the same values as its Friday closing price so I would think there's time to measure the market and find your entry.