What happened

Shares of Enphase Energy (NASDAQ:ENPH) fell as much as 11.8% today, and have now lost over 25% since Aug. 26. There hasn't been any negative news to send the stock tumbling in recent weeks, but the stock had posted a 600% year-to-date gain before the recent plunge began. It wouldn't be too surprising if investors want to take some gains off the table from what's been one of the best renewable energy stocks on the market.

That's especially true following a vertical ascent at the end of July, when the business reported second-quarter 2019 operating results that blew past expectations from analysts and even executives. The stock price climbed by more in a single day than it had been worth at the beginning of the year.

As of 3:23 p.m. EDT, the stock had settled to an 8.6% loss.

A line chart drawn on a chalkboard, showing a steady increase and then a sudden drop

Image source: Getty Images.

So what

On the one hand, shares of Enphase Energy are trading at 7.7 times sales and more than 26 times book value -- very expensive valuations. On the other hand, the business has finally turned a corner with its new product lineup and latest-generation IQ 7 microinverters. The business is profitable and growing at a healthy clip -- very attractive characteristics.

Enphase Energy reported an operating margin of 10.5% in the first half of 2019, compared to an operating margin of negative 2.1% in the year-ago period. It grew operating cash flow 327% in that span and converted 13.5% of total revenue into cash flow. In other words, the stock's ascent is no fluke, and the business appears capable of growing into its premium valuation.

Now what

Even after today's tumble, shares of Enphase Energy have ascended 445% since the beginning of the year. Given the exponential growth of solar energy and the company's recent success, investors with a long-term mindset might consider the recent plunge a buying opportunity -- and they may have a strong argument to make.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.