Market Overview

Short Interest in Solar Stocks on the Rise (GTAT, RSOL, SPWR)

With a couple of exceptions, the short interest in solar-related companies based in the United States grew in late February.

The number of shares sold short in First Solar (NASDAQ: FSLR), GT Advanced Technologies (NASDAQ: GTAT), MEMC Electronic Materials (NYSE: WFR), Real Goods Solar (NASDAQ: RSOL) and SunPower Holdings (NASDAQ: SPWR) all increased between the February 15 and February 28 settlement dates.

The outliers were Advanced Energy Industries (NASDAQ: AEIS) and SolarCity (NASDAQ: SCTY), which saw short interest decline somewhat during that time.

Also, U.S.-listed shares (or ADRs) sold short of foreign companies Canadian Solar (NASDAQ: CSIQ), J.A. Solar Holdings (NASDAQ: JASO), ReneSola (NYSE: SOL), Suntech Power Holdings (NYSE: STP), Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) also increased in later February, while short interest in China Sunergy (NASDAQ: CSUN) and LDK Solar (NYSE: LDK) declined.

The biggest percentage upswings in short interest in the stocks of U.S. solar companies between the February 15 and February 28 settlement dates happened to GT Advanced Technologies, Real Goods Solar and SunPower Holdings.

GT Advanced Technologies

This Nashua, New Hampshire-based company saw short interest grow more than eight percent in late February to 38.25 million shares. That was the highest number of shares sold short in at least a year, though days to cover fell to about 10. Short interest is more than 32 percent of the float.

The crystal growth equipment provider for the solar and electronics industries posted a deeper-than-expected loss and missed revenue estimates in its most recent quarterly report. The company has a market capitalization of more than $310 million. The long-term earnings per share (EPS) growth forecast is about 10 percent, the return on equity is more than 31 percent, and the operating margin is greater than the industry average.

All but two of the 13 analysts who follow the stock and were surveyed by Thomson/First Call recommend holding shares, and that has been the consensus recommendation for the past two months. The mean price target, which is where the analysts expect the share price to go, is about 23 percent higher than the current share price, but well below the 52-week high from almost a year ago.

Shares are trading near the 52-week low, and the share price is down about 17 percent year to date. The stock has underperformed larger competitor Applied Materials (NASDAQ: AMAT) and the broader markets over the past six months.

Real Goods Solar

Short interest in this solar installation services provider surged about 286 percent to more than 111,000 shares, by far the highest number of shares sold short in a year. The number of shares sold short represents less than two percent of the float, though, despite rising in each of the five past reporting periods.

The Colorado-based solar energy company recently launched a new online store offering solar power solutions for both homes and businesses. The company has a market cap of less than $50 million. Its long-term EPS growth forecast is about 20 percent, but its return on equity is in negative territory.

Only two surveyed analysts follow the stock, and they both recommend holding the shares. The mean price target, such as it is, is about the same as the current share price, suggesting no upside potential.

The share price has retreated more than 26 percent in recent weeks, despite pulling back more than six percent in the past week, following a surge in early February along with other solar stocks. Over the past six months, the stock has outperformed the Nasdaq and the S&P 500.

SunPower

Shares sold short in this integrated solar products and services company rose about 12 percent in the period to about 9.92 million. That is more than twice the number shares sold short than at the beginning of the year. The short interest has risen to about 25 percent of the float.

Headquartered in San Jose, California, this company has a market cap near $1.5 billion. The stock benefited in mid-February from a pair of encouraging sector reports. While the company has a long-term EPS growth forecast of more than 22 percent, its return on equity is in the red and the operating margin is less than the industry average.

The consensus recommendation of 17 analysts polled is to hold shares, and it has been for at least three months. And note that the current share price has far outstripped the mean price target, suggesting that the analysts may have stopped paying attention here.

However, the share price is up more than 97 percent year to date, though shares have traded mostly between $11 and $13 for the past three weeks. The stock has outperformed First Solar and Suntech Power, as well as the S&P 500, over the past six months.

Posted-In: Advanced Energy Industries applied materials canadian solar China Sun EnergyLong Ideas News Short Ideas Trading Ideas Best of Benzinga

 

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