Enphase Energy Inc. (ENPH) delivers energy management technology for the solar industry. The company designs, develops, manufactures and sells home energy solutions that connect solar generation, energy storage, and management on one intelligent platform.
The company revolutionized the solar industry by creating a semiconductor-based microinverter that converts energy at the individual solar module level. This has led to a strong position for the company in the booming solar microinverter market. Though insufficient tax equity financing could become a problem.
ENPH had $1.5 billion in cash as of the latest quarter compared with only $84 million in short-term debt. The company also has a healthy gross margin of 44.6%. Over the past three years, ENPH has grown sales an average of 42.4% per year. Analysts expected sales to soar 147.7% year over year in the current quarter.
The stock appears very overpriced with a forward P/E of 94.34 and EV/EBITDA of 210.29. ENPH stock saw bullish momentum from July to early 2021, but the stock then trended downward into early May. It has since reversed course and is showing positive momentum as seen in the chart below.
Take a look at the 1-year chart of ENPH below with the added notations:
Chart of ENPH provided by TradingView
ENPH has formed an important level to watch at the $175 (red) mark, as that level has provided both support and resistance over the past 6 months. The stock looks like it’s on its way back up to the level once again, and a breakthrough could open the door to much higher prices.
A trader could enter a long position on a break above the $175 level with a protective stop placed below it.
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ENPH shares were trading at $170.98 per share on Thursday morning, up $0.74 (+0.43%). Year-to-date, ENPH has declined -2.56%, versus a 14.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
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