With the stock market in correction, investors should view buy signals cautiously. The chances of a loss go up in market downtrends. But the stock market is trying to rally, and the trend could change at any time. So keeping track of stocks near a buy point will help investors get the best entry the moment a new uptrend starts.
Stock To Buy And Watch: Enphase Energy
Fremont, Calif.-based Enphase Energy makes microinverter solar products that generate, store and manage the use of electricity. With solar power systems that use microinverters, an inverter is attached to each solar panel. In other systems, all solar panels in an array are attached to one main inverter.
Microinverters allow monitoring of each solar panel’s efficiency, which helps pinpoint any issues. Also, unlike with systems that have one main inverter, if one microinverter fails, the rest of the system can continue to produce electricity.
Enphase Energy stock is ranked No. 1 in IBD’s solar energy industry group, according to IBD Stock Checkup. And it presides atop an industry group that’s found favor with investors. It ranks 21 out of 197 industry groups tracked by Investor’s Business Daily. The group’s ranking is down from No. 7 one week ago, but up from 176 three months ago.
Solar Stock’s Earnings
The solar company has a perfect Earnings Per Share Rating of 99. Earnings have risen 47%, 212% and 100% in the past three quarters.
In Q3, Enphase Energy earned 60 cents a share, doubling from the year earlier. Sales shot to a record $351.5 million, up 97%. The company’s after-tax margin came in at 23.9%.
“Strong demand for our microinverter systems continued in the third quarter of 2021, while shipments of our Enphase Storage systems increased approximately 51%, compared to the second quarter of 2021,” President and CEO Badri Kothandaraman said in the company’s Q3 report.
Enphase said it shipped nearly 2.6 million microinverters, which amounts to 913 megawatts of direct current. Kothandaraman indicated that the company has been dealing with supply-chain constraints and logistics challenges.
The company expects Q4 revenue in the range of $390 million to $410 million. That includes shipments of 90-100 megawatt hours of Enphase storage systems.
The consensus of analysts polled by FactSet sees Enphase Energy earnings of 60 cents a share in Q4, up 18% from 51 cents a year earlier. Q4 revenue is expected to climb 50% to $397.9 million.
For the full year, Wall Street sees EPS of $2.29, up 67% from $1.37. Analysts forecast a 34% gain next year. Revenue is pegged at $1.37 billion, followed by $1.92 billion next year.
After rocketing out of a double-bottom base in October, Enphase Energy stock topped near 282 just before Thanksgiving. It slid back to its 50-day moving average where it found support on Monday, presenting the first follow-on buy opportunity since the November breakout.
EHPH stock gapped higher Tuesday and rose 1.4% Wednesday to 225.61, according to MarketSmith. The buy zone extends to 239.80.
One weak point for Enphase Energy is that while the stock has a solid Relative Strength Rating of 96, the relative strength line has fallen significantly below new-high territory in the past couple of weeks.
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