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Why FuelCell Energy, Enphase, and Vivint Solar Stocks All Dropped 10% (or More) Today

By Rich Smith – May 1, 2020 at 9:02PM

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Sometimes, the stock market just doesn't make sense.

What happened

It's Friday afternoon, and with just 15 minutes to go in the trading day, it looks like we're going to be ending the week on a down note. The S&P 500 Index of companies is down 2.8%.

Alternative energy companies are leading the downward plunge today, with shares of hydrogen fuel cell star FuelCell Energy (FCEL 2.64%) down 5% at the 3:45 p.m. EDT minute mark (and down 13% earlier in the day). Shares of solar inverter-maker Enphase Energy (ENPH 3.29%) are off, as well -- down 7.8%. So, too, is solar installer Vivint Solar (VSLR), with its shares falling 8%. (And those two were down more than 10% earlier in the day). The question is... why?

Three colorful arrows all pointing down

Image source: Getty Images.

So what

By all rights, each of these alternative energy stocks should actually be up today, not down. After all, oil prices are up, with barrels of WTI crude nearly 5% more dear today than they were yesterday. Higher oil prices make alternatives to oil look relatively cheaper, so when oil prices go up, you'd ordinarily expect renewable energy stocks to go up, as well.

But they didn't. Not even Enphase, which won a higher price target from British banker Barclays today. According to TheFly.com, Barclays is forecasting growing shipments of both residential and commercial solar systems this year, with growth continuing into 2021, as well. That should be good news for Enphase: The analyst says the $43 stock is worth at least $76.

Growing solar shipments should be good news for Vivint Solar stock, as well. And yet, both stocks are going down.

Now what

That doesn't make much sense -- but then again, this is a lesson that investors should keep in mind: Sometimes, the stock market just doesn't make sense. Sometimes, stock prices fall when they should rise -- but this is not a reason to get discouraged.

If good news comes out but stocks get cheaper despite of it, it could be your cue to go ahead and buy some stocks!

The last time I checked, Enphase stock was net-debt-free and generating $125 million in annual free cash flow, while Vivint Solar ... wasn't. If you believe like I do that more solar shipments is good news for both stocks, I'd lean toward researching Enphase as a potential buy before considering Vivint Solar.

And FuelCell Energy? You already know how I feel about FuelCell stocks. Absent some remarkable turnaround in FuelCell's business, I'd stay away from that one, as well.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
ENPH
$286.61 (3.29%) $9.14
FuelCell Energy, Inc. Stock Quote
FuelCell Energy, Inc.
FCEL
$3.50 (2.64%) $0.09
Vivint Solar, Inc. Stock Quote
Vivint Solar, Inc.
VSLR

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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