We recently published a list of 13 Most Promising EV Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Enphase Energy, Inc. (NASDAQ:ENPH) stands against the other most promising EV stocks to buy according to hedge funds along with the industry outlook.
According to a September 13 report by S&P Global, the auto industry’s shift to electric vehicles (EVs) is accelerating, with 2026 seen as a pivotal year for adoption. By 2030, over 25% of new passenger cars sold are expected to be electric, as the transition away from internal combustion engines (ICE) gains momentum.
Major automakers are projected to produce over 70% of global EVs by 2030, up from just 10% in 2022. However, a few challenges remain, like range anxiety, especially for those without convenient charging options. Addressing these issues will require collaboration among automotive, utilities, government, and property owners, which could create a way for significant growth in vehicle electrification and potentially end the ICE era.
We discussed the market dynamics of the EV industry in our article, 11 Small Cap EV Stocks to Invest In. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
The Electric Vehicle Shift and Its Economic Impact on Europe
While Europe saw significant adoption of EVs in the earlier years, it has seen a slowdown. According to an October 3 report by McKinsey, the growth of EVs in Europe poses both opportunities and challenges for the automotive industry, which currently contributes $1.9 trillion to the economy.
While electric mobility could add up to $300 billion in gross value added (GVA) by 2035, the industry could risk losing $400 billion if European OEMs’ global market share declines from 60% to 45%.
Key strategies for success include expanding the domestic battery supply chain, improving manufacturing capabilities, streamlining regulations, and investing in R&D and talent development. By proactively addressing these challenges, European OEMs can capitalize on the EV shift, generate new value, and secure the region’s economic future in the automotive sector.
Shifting Gears to the Inevitable Future of Electric Vehicles
In a CNBC interview, Young Liu, Chairman of Hon Hai Technology Group said that the future of the automotive industry will be dominated by electric vehicles, with hybrids playing a limited role due to advancements in battery technology. He made a note of current challenges such as charging times and range anxiety, but expects improvements in battery systems will eliminate the need for hybrids.
Liu outlined a path to profitability for EV companies based on three key strategies: “platformization, modularization, and standardization”. He believes these will help streamline operations and reduce the need for individual investments in proprietary platforms, which is a challenge for traditional manufacturers due to their existing structures.
Our Methodology
For this article, we used stock screeners and ETFs to identify over 40 companies with significant operations related to the EV industry. Next, we narrowed our list to 13 stocks most widely held by institutional investors. The most promising EV stocks are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A solar panel array stretched across a large open field, its glimmering panels reflecting the sun.
Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 42
Enphase Energy, Inc. (NASDAQ:ENPH) is a leading company in the energy technology sector, recognized for its innovative solar micro-inverter technology that converts direct current from solar panels into alternating current suitable for home use and the power grid.
The company mainly serves residential customers and offers a range of solar solutions, energy storage systems, and EV charging products.
One of its significant products is the Enphase IQ EV Charger, designed for efficient and flexible EV charging. The charger connects to the internet and allows users to monitor and manage their charging sessions through a digital interface. It helps users optimize charging times for cost savings and lower environmental impact. Moreover, an accompanying app provides insights into energy consumption based on the EV’s battery capacity, which guarantees safe charging while delivering real-time data on energy usage.
Enphase (NASDAQ:ENPH) also offers flexible and reliable commercial EV chargers suitable for several applications, such as workplace charging, fleet management, and improving amenities in residential properties. The chargers are built for all-weather reliability, kept in fully sealed NEMA 4-rated enclosures, and come with integrated cable management solutions.
Its product lineup includes different charging stations, like the IQ EV Charger and HCS models, which offer several power levels and features such as energy monitoring and integration with existing energy systems and it meets different commercial needs.
Enphase (NASDAQ:ENPH) is constantly expanding and increasing its global footprint. On September 24, the company announced that it launched its most powerful system in India, which features the scalable IQ Battery 5P and IQ8 Microinverters to provide reliable backup during frequent outages. The system, with advanced lithium iron phosphate technology, offers continuous and peak power to run appliances and can restart using sunlight.
In addition to that, on October 3, it announced the launch of its IQ8X Microinverters in Australia, which offer peak output power of 384 W and is suitable for high-powered solar modules. Starting October 1, all IQ8 Microinverters activated in Australia will come with a 25-year limited warranty, the longest in the residential solar market there.
According to the Insider Monkey database of 912 hedge funds, 42 hedge funds had stakes in Enphase (NASDAQ:ENPH) in the second quarter, which brings the company to the 4th spot on our list of most promising EV stocks to buy.
Overall ENPH ranks 4th on our list of most promising EV stocks to buy according to hedge funds. While we acknowledge the potential of ENPH as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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 the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.