This IPO Is Entering a Crowded Market

The inverter market is about to get a little more crowded, with microinverter company Enphase readying for an IPO. The potentially $100 million IPO would value the relative newcomer at nearly $410 million if it hits the high end of its current range.

The company is entering a crowded inverter market that has seen stock prices plunge as investors worry about price pressure coming down the pipeline. But Enphase may have what its competitors don't: a commanding share of the microinverter solar market. Power-One (Nasdaq: PWER  ) , SatCon Technology, and American Superconductor (Nasdaq: AMSC  ) have been trying to grab share in the renewable inverter market, with varying levels of success, but there's reason to believe that Enphase may be leaps and bounds ahead.

Enphase has grown revenue from $20.2 million in 2009 to $149.5 million in 2011 on the back of strong demand in the growing U.S. solar market. The company commanded 34.4% of the California residential solar market, according to market research.

The company is also expanding into Europe, Power-One's bread and butter, and Enphase could provide stiff competition for this growing segment of the market.

Incumbent inverter makers and new ones like American Superconductor have focused on larger installations, like utility-scale projects by First Solar (Nasdaq: FSLR  ) and SunPower (Nasdaq: SPWR  ) . But the micro market may be where growth is headed.

Between Germany's new feed-in tariff rules and a growing number of locations that are reaching grid parity, rooftop solar will be in higher demand. SunPower and Canadian Solar (Nasdaq: CSIQ  ) have noticed the trend, building microinverters into some of their solar modules.

For now, Enphase is losing money, something Power-One isn't doing. But when the company hits the market, there's sure to be a lot of excitement about a new player in the renewable-energy market. Despite Enphase's positives, I'm just worried the market may be getting too crowded.

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Fool contributor Travis Hoium owns shares of SunPower in both a personal account and an account he manages. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Power-One. Motley Fool newsletter services have recommended buying shares of First Solar. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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