Enphase Energy (ENPH) Stock Pops: Here’s Why

Enphase Energy Inc (NASDAQ: ENPH) is trading on gains of more than 7% early on this morning. The gains come as the entire energy industry seems to be popping after an attack on a major oil facility in Saudi Arabia.

With the attack in mind, investors know why oil stocks like CEI, CHK, DNR, and YUMA are making a run for the top, but many are wondering why ENPH, a solar technology stock, is seeing gains. After all, the company doesn’t produce oil or technologies surrounding oil. Nonetheless, there’s a good reason for the gains and they are related to the attack.

Here’s what’s happening:

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ENPH Climbs As Oil Concerns Rise

Over the weekend, the largest oil facility in Saudi Arabia was attacked. A drone strike took the facility offline, taking 5 million barrels of oil per day out of the global supply equation and pushing energy stocks, including Enphase Energy for the top.

With 5% of oil production being taken out of the global equation, it’s clear why oil stocks like CHK, CEI and others are making a run for the top, but what does this have to do with ENPH?

The answer is simple. Solar and other clean energy technologies aren’t just a way to go green. They are also a way to offset the cost of energy for end consumers.

As a result of the recent strike on the Saudi Arabian facility, the price of oil is climbing. Because oil is a necessary commodity for the traditional power grid, should these gains in the cost of oil continue, the cost of traditional energy is likely to climb.

This is a big deal for ENPH. After all, the company offers an alternative to the traditional power grid. If traditional energy costs see a significant increase in the coming months as a result of the attack on the Saudi Arabian facility, demand for alternative energy will likely rise.

Of course, demand increases in alternative energy are great for ENPH. After all, the company is focused in the consumer solar space. So, any increase in demand will lead to a potential increase in the company’s revenue.

The Opportunity Here Could Be Tremendous

At the end of the day, this could be a VERY big opportunity. When the attack in Saudi Arabia first happened, experts said that they expected to see minimal gains in oil, from 5% to 10%. Early Monday morning, the gains in crude already surpassed these expectations, gaining 10.8%.

Many are now expecting that these gains will continue. For Enphase Energy, investors should keep a close eye on these trends. The higher the price of oil goes, the larger the opportunity becomes for alternative energy investments. So, pay close attention to what’s happening with crude.

Also, keep a close eye on the underlying factors leading to such gains in oil. Not only was the Saudi facility attacked, geopolitical tensions are heating up as a result of the attack between the United States and Iran. Further geopolitical issues in the Middle East could have a profound effect on oil prices ahead, only expanding the opportunity offered by ENPH.

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