Why We're Buying a Solar Company

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

John and David are making a small investment in a growing company within the solar industry: Enphase Energy. Enphase Energy sells microinverters for solar panels. Inverters convert the DC power coming from the solar cells to AC power that can be used. Solar panel makers such as First Solar have been dogged by an oversupply of panels. However, solar panels do not work without inverters. Competitors Power-One and Advanced Energy Industries sell central inverters, which collect the inputs from all of the panels into a single source and convert it to AC power. Enphase sells microinverters that attach to each individual panel, as well as software that can monitor the system. It’s more expensive, but provides lower cost of ownership. Enphase Energy microinverters are taking the industry by storm. The company is growing quickly, and has plenty of opportunity ahead of it. The key will be if it can continue to increase its margins as it grows. David thinks Enphase’s margins will improve but, given the risks, he has decided on a small position.




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David Meier has no positions in the stocks mentioned above. John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Power-One and Solazyme. Motley Fool newsletter services recommend First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (7)

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  • Report this Comment On October 05, 2012, at 7:34 PM, truman1987 wrote:

    I just bought a solar system for my business and am using enphase microinverters. The really increased the ROI on the project because they are more efficient than a central inverter. This technology will catch on very quickly.

    My issue with enphase is that they have a lot of debt and they aren't making money. How are they going to be able to turn this around without diluting the shares?

  • Report this Comment On October 05, 2012, at 11:12 PM, NotDutchNotMuch wrote:

    I am wondering which "safer" company was bought to balance out SZYM?

  • Report this Comment On October 06, 2012, at 9:19 AM, TMFBane wrote:


    We balanced Solazyme with ExxonMobil.

    Here's the original write-up:

  • Report this Comment On October 06, 2012, at 11:59 AM, Teacherman1 wrote:

    I own PWER and like them for the longer term, but will take a look at ENPH, and not just dismiss them out of hand, since I have never looked at them.

    I am interested in all "green energy" stocks, except for windfarms and solar panel manufacturer's.

    I prefer companies that can "tie in" to all of them, and are not reliant on a single company being successful.

    I even like CPST, FCEL, and BLDP, and especially at these prices.

    Will all of them pay off, not necessarily, but I think they all have a very good chance, and are worth taking at least a small position.

    Thanks for continuing to look for opportunities, and telling us about them.

    JMO and worth exactly what I am charging for it.

  • Report this Comment On October 26, 2012, at 1:58 AM, brokerbroke wrote:

    I bought and don't regret. ENPH will survive till the next, better thing. Looking for a short hold to even-up now...if volume stays low...then maybe put the $$$ back into KiOR.

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