Why Enphase Energy (ENPH) Stock Is Popping Off

Enphase Energy Inc ENPH shares are trading higher by 3.75% to $122.97 Wednesday afternoon after the Federal Reserve cut interest rates by 50 basis points.

Why This Matters: Enphase Energy is a leading provider of solar energy solutions, particularly microinverters and energy management systems. Solar installations often require significant upfront capital investment, much of which is financed by loans.

Lower interest rates reduce the cost of borrowing for consumers and businesses interested in solar projects, making it cheaper to install Enphase’s systems. This can drive higher demand for their products.

As homeowners find it cheaper to finance solar panels due to lower interest rates, the adoption of solar energy systems, like those that use Enphase's microinverters, could accelerate. This boosts Enphase’s core business by increasing sales of its products and services.

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What Else: Lower borrowing costs also benefit large-scale solar and renewable energy projects, which often rely on debt financing. Lower rates make these projects more financially viable, and since Enphase provides solutions for commercial and utility-scale installations, the company could see a rise in demand from this segment.

Enphase is also a growth-oriented company, and lower interest rates typically increase the attractiveness of growth stocks. With future cash flows discounted at a lower rate, the present value of those cash flows rises, making Enphase’s stock more attractive to investors seeking growth opportunities in sectors like renewable energy.

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Is ENPH A Good Stock To Buy?

An investor can make a few decisions when deciding whether a stock is a good buy. In addition to valuation metrics and price action which you can find on Benzinga's quote pages – like Enphase Energy‘s page for example – there are factors like whether or not a company pays a dividend or buys a large portion of its stock each quarter.

These are known as capital allocation programs. Enphase Energy does not pay a dividend, but obviously has a few ways it can return value to shareholders. Feel free to search Benzinga's dividend calendar for the next company that is due to pay a dividend and determine what kind of yield you can earn for holding a share of the company.

For example, if you're looking to earn an annualized return of 23.1%, you'll need to buy a share of North American Finl 15 by the Sep. 30, 2024. Once done, you can expect to receive a nominal payout of $0.11 on Oct. 10, 2024.

Buyback programs are obviously different and highly variable. A company can approve a buyback program and purchase shares as it sees fit over the course of time in which the buyback was authorized. Looking through the latest news on Enphase Energy will often yield whether or not the company has approved a buyback program recently. Buyback programs usually serve as a support for share prices, serving as a backstop for demand.

According to data from Benzinga Pro, ENPH has a 52-week high of $141.59 and a 52-week low of $73.49.