Semiconductors Play - BUY Recommendation!

Market Summary:

The major indices are all sporting modest gains at midday, as stocks settled down somewhat this morning following yesterday's promising broad-based rally. The Nasdaq and the S&P 500 still eked out new all-time highs in the first hour of trading, with small-caps also adding to their gains from the past two sessions. Asian and Chinese stocks, in particular, surged higher overnight, erasing some of their recent steep losses, thanks to the easing regulatory fears, and Treasury yields edged higher as well in thin trading ahead of this week's key Fed event.


Stock Pick Summary:

Our new addition today designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter, which converts energy at the individual solar module level, and combines with its proprietary networking and software technologies to provide energy monitoring and control services. Their microinverters have a significant technology advantage over traditional string inverters. They harness power from every panel individually. This superior product allows it to produce higher margins than competitors because of this edge.


In addition, it puts its big cash position to use with small accretive acquisitions and buybacks. It has been expanding its products into new markets. Energy storage was recently introduced in Europe. In April 2021, its microinverters were selected by Transdev for the first public transport depot in Australia to feature a fully solar-powered bus. This will be beneficial for it to grow its network in Australia, as Transdev plans to electrify the public transport network in Australia and make a transition to solar-powered electrical vehicle (EV) buses.


Earlier, toward the end of 2020, it announced the launch of its Enphase Installer Network (EIN) in Australia. It has introduced new products like small commercial solar microinverter and off-grid solar and storage that could add additional revenue streams. With grid infrastructure inadequacies likely to be exposed in the years ahead (remember the rolling blackouts in California last summer?), this may be an exciting growth prospect for the long term.




Risk Meter:

Allocation Guidelines:

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