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Tesla Hits Records as Nasdaq's Big 2020 Winner; Enphase to Join S&P 500

By Dan Caplinger - Dec 31, 2020 at 3:35PM

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High-flying stocks continued to hang onto their momentum to finish 2020.

The Nasdaq Composite ( ^IXIC 3.03% ) has been an exciting place for investors in 2020, and so it's reasonable that the high-flying index would take a break to finish a historic year. As of 2:45 p.m. EST, the Nasdaq Composite was down just a tiny fraction of a percentage point, having regained much of its losses from earlier in the session.

It shouldn't come as a big shock that Tesla ( TSLA 4.24% ) is finishing 2020 on a positive note. With a push to all-time record highs, the electric automaker became part of the S&P 500 index and has joined the mainstream of the investing world. Meanwhile, another stock from the Nasdaq's ranks will follow in Tesla's footsteps soon, as Enphase Energy ( ENPH 4.52% ) got a vote of confidence from index managers.

Tesla tops the list

It's hard to overstate the influence that Tesla has had on the Nasdaq and the broader market in 2020. The stock added another 2% on Thursday afternoon, climbing above the $700-per-share mark for the very first time.

White charging station with Tesla logo on top.

Image source: Tesla.

The big question that investors always have for Tesla as the end of the year approaches is whether the electric vehicle pioneer will be able to get as many cars delivered to customers as it projected. The typical Tesla end-of-quarter push is in full swing, with the usual messages being sent from CEO Elon Musk to employees urging them to take every possible step to maximize vehicle deliveries to make the quarterly and yearly targets.

Tesla's 500,000 vehicle goal was ambitious even before the COVID-19 pandemic struck, and that complicated things even further. However, even with the challenges in front of it, the company might well end up above that number once the final tallies are in.

Regardless, the longer-term story for Tesla involves pent-up demand and continuing rising interest in its vehicles, as well as the other technologies that it has developed. If it can keep up its momentum, Tesla could have a lot of growth ahead of it, and high-priced shares give the automaker stock some capital-raising options that its rivals can only wish they had.

Enphase gets its day in the sun

Shares of Enphase Energy were also on the rise, climbing 2%. That was short of an all-time record, but the solar panel microinverter specialist got some good news from the folks at S&P Dow Jones Indices.

Enphase will join the S&P 500 index effective Jan. 7, moving up from the S&P MidCap 400 index. A spot opened up in the S&P 500 with the expected purchase of high-end jewelry icon Tiffany ( TIF ) by LVMH Moet Hennessy Louis Vuitton. After that sale is complete, Tiffany shares will no longer trade, and that put S&P Dow Jones Indices in a position in which it had to find a replacement.

Unlike Tesla, Enphase's addition shouldn't create a huge disruption for index fund investors in mutual funds and ETFs that track the S&P 500. Enphase's market capitalization is just $22 billion even after the run-up today, and that means that only a small fraction of a percent of index fund assets will have to go toward purchasing Enphase shares. The move will likely still have some impact on share prices, but it won't grab the same amount of attention that Tesla's addition did.

Joining the S&P 500 is a big moment for Enphase, but the company's long-term future relies on ongoing demand for solar energy installations. There's still plenty of room for growth in that arena, and Enphase's first-mover advantage in microinverters gives it an edge that it'll carry into 2021 and beyond.

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.

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Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$1,051.75 (4.24%) $42.74
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$15,686.92 (3.03%) $461.76
Tiffany & Co. Stock Quote
Tiffany & Co.
TIF
Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
ENPH
$222.56 (4.52%) $9.62

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

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