Market Overview

Short Sellers Retreat from Real Goods Solar and SunPower Holdings

The short interest in solar-related companies based in the United States was mixed in the first two weeks of March.

The number of shares sold short in Advanced Energy Industries (NASDAQ: AEIS), First Solar (NASDAQ: FSLR) and GT Advanced Technologies (NASDAQ: GTAT) increased between the February 28 and March 15 settlement dates.

But MEMC Electronic Materials (NYSE: WFR), Real Goods Solar (NASDAQ: RSOL), SolarCity (NASDAQ: SCTY) and SunPower Holdings (NASDAQ: SPWR) saw short interest in their shares decline during that time.

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

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

Advanced Energy Industries

This Fort Collins, Colorado-based company saw short interest grow more than 22 percent in early March to 1.18 million shares. That ended a streak of three periods of falling short interest. The number of shares sold short represents more than three percent of the float.

In March, this maker of power conversion products was selected to bring solar power to one of the oldest federal buildings in Washington, D.C. The company has a market capitalization of about $718 million. The long-term earnings per share (EPS) growth forecast is about 15 percent, but the price-to-earnings (P/E) ratio is greater than the industry average and the return on equity is only about five percent.

Three out of seven analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, but none recommend selling. The mean price target, which is where the analysts expect the share price to go, is about six percent higher than the current share price. That target is less than the recent 52-week high.

The share price has pulled back about four percent from that 52-week high. But shares are up about 34 percent year-to-date. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.

Real Goods Solar

Short interest in this solar installation services provider fell about 11 percent to 99.19 million shares during the period, retreating a bit from a 286 percent surge in the previous period. The number of shares sold short still represents less than two percent of the float.

The Colorado-based solar energy company is scheduled to report four-quarter and full-year results next week. Real Goods Solar has a market cap of about $50 million. Its long-term EPS growth forecast is about 20 percent, but its return on equity is in negative territory.

Only one analyst was surveyed, and that analyst recommended holding the shares. The current share price is greater than the price target listed, suggesting there is no upside potential at this time.

Shares have traded mostly between $1.70 and $1.90 for the past month. But the share price has more than doubled year-to-date. 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 declined about 16 percent in early March to about 8.33 million. That erased a 12 percent gain in the previous period. The short interest has pulled back to about 21 percent of the float, but days to cover jumped to about three from a little more than one.

Headquartered in San Jose, California, this company has a market cap near $1.4 billion. The chief executive officer predicted the company would see very strong third and fourth quarters. While the company has a long-term EPS growth forecast of more than 22 percent, its return on equity and operating margin are in the red.

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 almost 88 percent year to date, though shares have traded mostly between $11 and $13 for more than a month. The stock has outperformed competitors 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 Energy First Solar GT Advanced TechnologiesShort Ideas Trading Ideas Best of Benzinga

 

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