Enphase Energy Stock at Support Zone – Bargain or Trap?
Enphase Energy (ENPH) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($29.58 – $32.70), levels from which it has bounced meaningfully before. In the last 10 years, Enphase Energy stock received buying interest at this level 3 times and subsequently went on to generate 312.4% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 2/4/2020 | 60.1% | 17 |
| 4/7/2020 | 858.9% | 969 |
| 6/18/2025 | 18.2% | 8 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For ENPH Read Buy or Sell ENPH Stock to see how convincing this buy opportunity might be.
Is holding ENPH stock risky? Of course it is. High Quality Portfolio mitigates that risk.
Here are some quick data points for Enphase Energy that should help decision:
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- Revenue Growth: 21.0% LTM and 0.5% last 3 year average.
- Cash Generation: Nearly 14.4% free cash flow margin and 13.7% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ENPH was -49.2%.
- Valuation: ENPH stock trades at a PE multiple of 20.8
- Opportunity vs S&P: Compared to S&P, you get lower valuation, higher LTM revenue growth, and lower margins
For quick background, Enphase Energy provides innovative home energy solutions for the solar photovoltaic industry, serving solar distributors, installers, OEMs, partners, and homeowners worldwide.
| ENPH | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductor Materials & Equipment | – |
| PE Ratio | 20.8 | 23.6 |
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| LTM* Revenue Growth | 21.0% | 5.4% |
| 3Y Average Annual Revenue Growth | 0.5% | 5.3% |
| Min Annual Revenue Growth Last 3Y | -49.2% | -0.1% |
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| LTM* Operating Margin | 13.7% | 18.7% |
| 3Y Average Operating Margin | 12.9% | 18.0% |
| LTM* Free Cash Flow Margin | 14.4% | 13.1% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
Enphase isn’t immune to big drops. It fell about 63% in the 2018 correction, nearly 60% during the Covid crash, and took the hardest hit with a 78% drop in the inflation shock. Even with all the tailwinds, these dips show the stock can get hit hard when the market turns sour. Good fundamentals matter, but volatility is still very much part of the game.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ENPH Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.