Over the past month, scores of growth stocks have bounced back. That hasn’t been the case, however, for Enphase Energy (NASDAQ:ENPH). In fact, since the start of 2023, ENPH stock has experienced a moderate drop in price.

It’s not a mystery why investors have soured on shares in this provider of microinverter-based solar storage systems. With demand for solar energy expected to soften in the near term, due to the current economic challenges, the market is right now taking a more cautious approach with the stock.

However, this current focus on the near-term works to your advantage. Following the recent weakness, ENPH shares have fallen to a favorable entry point for a long-term position. Macro conditions will inevitably improve.

Furthermore, the global push to “go green” isn’t going away. This factor leaves Enphase well-positioned to re-enter high-growth mode and stay there, for years to come.

Why Investors Have Cooled on ENPH Stock

You may recall that 2022 was a banner year for Enphase Energy, for two reasons. First, thanks to factors such as the energy crisis in Europe, the company benefited from soaring demand for its offerings. For the full year 2022, revenue increased 68.7%, and earnings per share increased by nearly 170%, from $1.09 to $2.94 per share.

Second, a bona fide game-changer emerged for the company, and for ENPH stock, with the Inflation Reduction Act, or IRA. Passed by Congress, and signed into law by President Biden last August, this bill provides numerous tax and other financial incentives that will likely help speed up the adoption of renewable energy, including solar.

But as I mentioned above, these two positives have taken a backseat to concerns of weaker results in the coming quarter. Even as management’s guidance for revenue this quarter (between $700 million and $740 million) came in ahead of the sell-side’s forecast ($685.2 million), this has done little to change the market’s “wait and see” stance on shares.

Nevertheless, even if it may take some time for the stock to come back into favor, if you’ve yet to enter a position, now is an opportune time to do so.

Growth at a Very Reasonable Price

Trading for around 70.6 times trailing twelve-month earnings, I can see why valuation-conscious investors may be leery about diving into ENPH stock today. Yet while I agree that this is a premium valuation, based upon this company’s future growth prospects, it is more than reasonable.

How so? Despite the pessimism about 2023 results, the company is expected to report another year of high earnings growth. Analyst forecasts currently call for earnings per share (or EPS) of $5.38 during 2023. This gives ENPH a less-rich forward multiple of around 38.7.

As for 2024 and 2025, analyst consensus calls for EPS to rise to $7.09 and $8.36, respectively. With this, Enphase’s current valuation gets even more reasonable. Not only that, it’s very possible that current forecasts are conservatively estimating the extent to which growth takes off, once today’s macro headwinds clear up.

Thanks to the aforementioned IRA, the use of solar panels by U.S. households (currently at just 8%) could increase significantly, which will also significantly increase demand for microinverters and battery storage products. As I discussed previously, Enphase’s growth prospects in Europe remain very bright as well. There’s a strong chance future results handily beat today’s expectations.

Bottom Line

In recent years, there have been scores of renewable energy stocks that have promised the world but have failed to deliver. Enphase Energy is definitely not in that category.

Successfully scaling up to the point of profitability back in the late 2010s, its earnings have taken off thus far in the 2020s. As governments around the world push for the transition away from fossil fuels, this is likely to continue.

Consider the market’s current sentiment short-sighted. In fact, based on the latest guidance, and on forecasts for 2023 earnings, the market’s current view may be overly pessimistic. Although not appreciative of the latest results, investors could respond more positively to subsequent quarterly results.

Before that happens, feel free to seize the opportunity, by beginning to accumulate a position in ENPH stock, as it continues to trade at a more-than-reasonable valuation.

ENPH stock earns an A rating in Portfolio Grader.

On the date of publication, Louis Navellier had a long position in ENPH. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.