A Curious Buy From A CEO With A 10 Bagger The Last Time He Bought This Stock

Wall Street probably has the most recognizable legal disclaimer, past performance is no guarantee of future performance. Ok, we agree, but if we can get a fraction of this insider’s performance from his last buy, we’ll take it, disclaimer or not.

Prior to last week, Enphase Energy, Inc. (ENPH) Chief Executive Officer (CEO) Badrinarayanan Kothandaraman last bought ENPH on November 21, 2019 at $17.69 for a total investment of $176,918. Thirteen months later, the CEO sold 30,000 shares at $174.32. Yep, you read that right, the decimal moved over one digit to the right, nearly a 10 bagger. (1)

Enphase Energy is a global energy technology company and the world’s leading supplier of microinverter-based solar-plus-storage systems. The Company delivers smart, easy-to-use solutions that connect solar generation, storage, and energy management on one intelligent platform. Its semiconductor-based microinverter system converts energy at the individual solar module level and brings a system-based high-technology approach to solar energy generation, storage, control, and management.

According to Acumen Research and Consulting, “The global Micro Inverter Market size was valued at USD 2.4 Billion in 2022 and is projected to attain USD 11.8 Billion by 2032 mounting at a CAGR of 17.8% from 2023 to 2032.” (2)

While its market is expected to experience explosive growth in the next decade, Wall Street analysts predict a tough year ahead for the California based technology company. The street sees ENPH’s earnings per share (EPS) dropping from $4.42 this year to $4.21 in 2024. Revenue is also expected to take a hit, slipping more than 15 percent to $1.97 billion next year from $2.32 billion in 2023. (3)

The expected decline appears to be priced into the solar company’s share price. ENPH is a third of where it traded a year ago with a 52-week high of $339.92. It recently set its 52-week low of $73.49 after lowering fourth quarter sales guidance to between $300 and $350 million versus the consensus forecast of $597 million.

Rolling downhill for all of 2023 made Enphase Energy one of the worst performing companies in the S&P 500. (3) And analysts don’t expect the stock to recover much of its losses in the year ahead with a one-year price target of $115.32. (4) As of this writing, ENPH trades at $100.22.

OVERALL: All this bad news makes CEO Kothandaraman’s recent purchase of 1,118 shares at $90.23 for a little more than $100k, a bit curious. Especially considering his early trades. He accumulated stock starting in November 2017 at $1.78 a share. He continued to buy through August 2018, acquiring close to 150,000 shares before becoming a habitual seller, unloading more than $162.7 million in stock in total.

From our experience, investors might consider exercising some patience and adding Enphase Energy, Inc. (ENPH). Shares could be poised for some profit taking as the solar stock flirts with its 50-day moving average of $104.38. There is some technical support at $90. If the stock catches a bid and rebounds there, it could make for a decent entry point with a stop loss around $88-89. Anything under $88-$89 and ENPH could test its 52-week low. A second bounce at the low might harden support and give the stock a base from which to build.

ENPH is only appropriate for the most aggressive investors who want exposure to a fast-growing segment of the solar market and have a time horizon of at least two years.

Rich Meyers

 

1 – https://www.secform4.com/insider-trading/1543777.htm

2 – https://www.acumenresearchandconsulting.com/micro-inverter-market

3 – https://finance.yahoo.com/m/6180dbd8-ad58-3938-ae10-22f028e510b2/enphase-energy-how-a-still-.html

4 – https://finance.yahoo.com/quote/ENPH?p=ENPH

5 – https://www.secform4.com/insider-trading/1543777.htm