🍨 Daily Scoop: A Brain for Your TV

By Hoda Mehr Mon, Sep 9, 2019

• U.S. markets: All three indices agreed on the direction of the market, and finished Monday in the red zone. Scroll to the Overall Market section to learn more.
• Cryptocurrency: Contrary to the overall stock market, Bitcoin’s priceis in the green zone and eyeing the $11,000 mark.

This Could Be 8x Better Than Buying Amazon In 1997 

Discover The Wealth Building Secret That Powered Bill Gates, Steve Jobs And Mark Zuckerberg To The Top Of The Global Rich List.

Don’t miss your “Overnight Fortune” opportunity…

Just Tap Here to be Included 

One leg of our four-legged economy is lagging behind. 

What happened on Tuesday?

On Tuesday, the Institute for Supply Management released its manufacturing index for August, and the index showed a gloomy, downward picture of manufacturing in the U.S. It looks like when manufacturing is not growing in the rest of the world, the U.S. cannot do much better either. We’ve seen the manufacturing sector slowing down in China and Germany, and it’s not the U.S. turn. No surprise there!

What does this mean?

GDP is a four-legged creature. In other words, there are four parts to GDP growth. Consumer spending, net investments, government spending, and the net value of exports are the four legs of GDP. Whenever one of these four legs lag, the overall GDP growth suffers. Higher manufacturing means more wages for workers, consequently, it leads to more consumption for consumers. When manufacturing lags, the ultimate result will be lower GDP, and that has scared the market on Tuesday.

This company had a great 2019, so far. 

So, what happened? 

So far, 2019 has not been particularly known for its outstanding returns. Trade war, inverted yield curve, Brexit are some of the common themes that scare investors from investing in the stock market. A handful of well-managed companies in growing industries still find the wind behind their backs. Today, we are looking into one such company.

Meet Enphase Energy Inc 

According to Enphase Energy’s (Ticker: ENPH) annual report, it designs, develops, manufactures and sells home energy solutions that connect and manage energy generation and energy storage components via one intelligent platform. The company’s product is unique and allows for more efficient installation and utilization of solar energy. Moreover, the company manufactures the semiconductors needed to convert solar power to energy.

The company’s origin

After its IPO in 2012, the company suffered from operational inefficiencies. The issues were so invasive that it had to raise additional investment from some of the most prominent investors in the future of energy such as John Doerr. A new management team, a disciplined approach to operations, and the acquisition of SunPower have put the company on the right path to success.

Recent turnaround

In August 2018, the company raised approximately $62.4 million from a convertible debt offering. Another $40 million and some were associated with the company’s long-term loan balance. It has used the money it raised through private investment to pay off its long-term loan, which was partially due in 2019 and needed to be fully repaid in 2020. In Q4 2018, the company turned profitable using both GAAP and non-GAAP measures. It is now a cash-generating, and investors have celebrated the turnaround into 2019. The stock is up more than 500% in the first nine months of 2019.

There is still risk 

While internal challenges are resolved, externally, many more remain:

– The U.S.-China tariffs and the competition from the likes of Huawei and SolarEdge are among such worries.
– Not to forget the U.S. government reducing the renewable tax incentives that were once the main reason customers would convert to renewable energy.
– Moreover, the company’s debt to equity ratio is alarming 14X. This debt is reflective of the company’s new round of private investment through a convertible debt offering. This new financing structure can dilute the existing investors because it will increase the number of outstanding shares at its maturation.

Final takeaway

While in the current market conditions caution is warranted, nevertheless, well-managed companies find their way to success. We don’t know whether Emphase can continue to grow at its current rate, but the future of residential energy and its growth opportunity is no small market. Assuming that Enphase can continue to keep its operations efficient, there is no reason to believe the stock has to stop growing, even after more than 500% growth in nine months. Afterall, Enphase reaps the power of the sun.

Tomorrow, we will share the second company from this 3-part series of stocks that are crushing it in 2019, so far.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card