Could Enphase Energy Stock Stay Strong?

This year’s star solar stock, Enphase Energy (ENPH), has rallied almost 40% in the last month. Many solar stocks have had a strong run, with an average gain of 65% year-to-date. Solar microinverter stock Enphase has surged more than 460% this year. Meanwhile, peer SolarEdge Technologies (SEDG) has soared 170%.

Enphase has risen by almost 25% since our article last month, Is Enphase Energy Stock Readying for Another Big Move? Let’s see if its steam will carry through into 2020.

Enphase Energy: Technical indicators

ENPH stock is currently trading at $26.80, almost 21% and 34% above its 50-day and 200-day simple moving averages, respectively. The large premium to both key support levels suggests strength in the stock. The stock breached its 50-day average late last month and has been strong since then. This level, close to $22.20, might act as short-term support for the stock.

In the medium-to-long term, ENPH’s 200-day average around $20 could act as crucial support. Its RSI (relative strength index) score currently stands at 81, implying the stock is overbought and may soon reverse direction. Enphase stock has fallen almost 27% from its all-time high of $35.40 in August. It has increased by 470% since touching a 52-week low of $4.56 last December.

In comparison, SolarEdge stock is trading 11% and 38% above its 50-day and 200-day averages and looks strong. It’s close to its all-time high of $96.70 at the moment. SolarEdge stock is also overbought, with an RSI score of 71.

The top solar stocks’ valuation

Enphase Energy’s forward price-to-sales (or PS) ratio is around 4.2x, based on analysts’ 2020 sales estimate of around $780 million and revenue growth of about 26% YoY (year-over-year). To compare, their revenue growth forecast for Enphase was close to 100% in 2019. In this year’s first nine months, Enphase’s revenue rose 84% YoY to $414 million.

SolarEdge’s forward PS ratio is around 2.8x. On average, analysts expect the company to report sales of $1.66 billion in 2020. To learn more about these stocks’ valuation, read ENPH or SEDG: Which Stock Is More Attractively Valued?

Analysts’ views

Of the 11 analysts covering ENPH stock, eight recommend “hold,” and the remaining three recommend “buy,” “strong buy,” and “sell,” respectively. Their mean target price of $31 implies an upside of more than 15% from its current market price of $26.80.

Meanwhile, of the 13 analysts covering SEDG, seven suggest “buy,” two rate it as a “strong buy,” three suggest “hold,” and one suggests “sell.” Their mean target price of $92.80 implies 1.5% downside from its current price of $94.20.