The Sun Is the Source

In yesterday’s Goldman Guide we predicted a positive uptick in three sectors; alternative energy, biotech, and consumer apparel stocks.

Biotech is no surprise for small cap, but there are some great plays emerging in alternative energy as we mentioned yesterday. This is a little surprising, given the cheap oil and gas prices throughout the globe. Many solar stocks have been, pardon the pun, on fire.

Enphase Energy, Inc. (NASDAQ – ENPH - $14.18) is an emerging stock that has materialized into a solid play. The Company, together with its subsidiaries, designs, develops, and sells microinverter systems for the solar photovoltaic industry. Its microinverter system consists of the Enphase microinverter and related accessories that convert direct current power to grid-compliant alternating current power. The Envoy communications gateway device collects and transmits performance information from each solar module to the Company’s hosted data center. The Enlighten Web-based software platform collects and processes this information to enable customers to monitor and manage their solar power systems. Enphase Energy, Inc. markets and sells its products primarily in the United States, Australia, Canada, France, the United Kingdom, China, and Italy, as well as in the Benelux region.

ENPH indicates a very bullish EMA signal from 50 to 200 days. A an average CAGR over 25% for 2015 and 2016 revenue over 2014 indicates there is still value in the stock with only a 17 forward P/E and a 5-year PEG at 1.5. The Company also has no debt as of December 31, 2014 with over $42 million in cash.

Positive deal flow should make ENPH heat up. A couple weeks ago the Company announced a strategic partnership with the French firm, MyLight Systems, to supply its Enphase Envoy system to be integrated into the MyLight monitoring system and will become the exclusive monitoring technology for the photovoltaic (PV) arrays embedded with MyLight’s advanced energy management solution.

We think the stock continues its positive momentum up to $16 by the middle of the summer.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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