We recently published a list of 11 Oversold Growth Stocks to Buy Now. In this article, we are going to take a look at where Enphase Energy, Inc. (NASDAQ:ENPH) stands against other oversold growth stocks to buy now.
The growth stocks, primarily proxied by high and consistent revenue growth, have shown sluggish performance in 2025 so far despite strong gains during the 2023-2024 period. The growth factor has been muted year-to-date due to the Trump-induced turmoil and uncertainty, favoring the safer value stocks instead. This has led to many growth stocks being oversold and trading at attractive valuations. Despite this, investors are still reluctant to buy because the overall market is still in ‘fear’ territory as proxied by the CNN Fear & Greed Index being at a relatively low value of 36/100. The key question to answer in this article is the following: Will the US stock market finally return to stability and growth?
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We believe there are some strong indicators that support the hypothesis that the market has bottomed and the outlook will shift bullish very soon. First, the market tends to bottom when there is peak pessimism in the news and among retail investors – this has happened last week as the Fear & Greed Index was in Extreme Fear territory and some notorious news portals like The Economist have published extremely bearish first-page stories suggesting that the dollar might be on the verge of collapse and so might the US stock and bond markets along with the US economy. Mainstream news portals tend to be late to the party and only acknowledge market depression after they have happened. From a contrarian perspective, this would mean that peak pessimism was already priced in sometime at the beginning of the month, and things could only get better from here.
Our hypothesis has already gotten some confirmation as the US stock market is up more than 5% since the beginning of the week, with the VIX index – a notorious proxy of investors volatility expectations – showing a score of 25, which is significantly below the peak of 60 around “Liberation Day” early this month. The VIX index score is thus close to its long-term moving average, which stands in the high teens, indicating that the market’s expectations are already normalizing. More certainty coming to the market is extremely bullish for stock prices and for the entire economy – it unmutes the Roaring 2020s economic tailwinds and gives clarity to CEOs and consumers to start spending again.
Another important indicator suggesting a potential return to growth for the stock market is the high-yield corporate bond spread declining from 461bps a few weeks ago to 348bps, as per Yardeni Research. High-yield bonds are usually related to smaller, high-growth companies, which resonate well with the growth factor we discussed earlier in the article. Declining yields for corporate bonds reflect less expectation of default, which tends to happen in anticipation of economic expansions.
Last but not least, the S&P index trades at a forward P/E of 19.5, which is significantly cheaper than the late 2024 peak of around 22.0. This means that there are more bargain prices to be found now than a few months ago, and if one expects the market to return to growth, then now is the best moment to find bargain deals. Many growth stocks are still in oversold territory from the effect of the tariff uncertainty, inflationary threats, and slowdowns across some industries.
A solar panel array stretched across a large open field, its glimmering panels reflecting the sun.
Our Methodology
To compile our list of oversold growth stocks, we used a screener to identify stocks with at least 20% revenue CAGR in the last 5 years, which are currently oversold by having an RSI below 40 and have significant average upside estimated by analysts. We rank them in descending order by the RSI value. For each stock, we also include the number of hedge funds that own the stock, as per Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Enphase Energy, Inc. (NASDAQ:ENPH)
RSI: 34.55
Estimated average analysts’ upside: 33.49%
Last 5 years revenue CAGR: 25.50%
Number of Hedge Fund Holders: 39
Enphase Energy, Inc. (NASDAQ:ENPH) is an energy technology company specializing in microinverter-based solar-plus-storage systems. Its core products are centered around solar energy management for residential and commercial customers – think of microinverters and batteries. ENPH’s systems are compatible with most solar panels, which makes it one of the leaders in the market. The company also offers electric vehicle charging solutions through its ClipperCreek brand.
Enphase Energy, Inc. (NASDAQ:ENPH) reported Q1 2025 revenue of $356.1 million, representing 35% YoY growth. The company’s US and international revenue mix was 74% and 26%, respectively, with US revenue decreasing 13% QoQ due to seasonality and softening demand, while European revenue increased 7%, driven by FlexPhase battery shipments in Germany. The company faced challenges from new tariffs, particularly on batteries sourced from China, which is expected to impact gross margins by 2% in Q2 2025 and 6-8% in Q3 2025, though they plan to fully offset this impact by Q2 2026 through supply chain diversification efforts.
Looking ahead, Enphase Energy, Inc. (NASDAQ:ENPH) is focusing on several growth initiatives, including the launch of its fourth-generation battery system, which delivers the lowest installation cost of any ENPH solar plus battery solution to date. The company is expanding its served available market in Europe with the introduction of the FlexPhase battery with backup, IQ EV charger, and the upcoming IQ Balcony Solar Kit. Additionally, they are preparing to launch the IQ9 microinverter powered by GaN technology in Q4, which is expected to unlock a 10-gigawatt opportunity in commercial solar while driving cost per watt improvements across their residential business. With President Trump hinting towards potentially reversing previous tariffs on China, ENPH represents one of the oversold stocks to consider at currently depressed prices.
Overall, ENPH ranks 2nd on our list of oversold growth stocks to buy now. While we acknowledge the potential of ENPH to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ENPH but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.