Market Overview

Short Sellers Retreat from Solar Stocks (AEIS, FSLR, SPWR)

By and large, short sellers shied away from solar-related stocks during the final two weeks of March.

The number of shares sold short in Advanced Energy Industries (NASDAQ: AEIS), First Solar (NASDAQ: FSLR), MEMC Electronic Materials (NYSE: WFR) and SunPower Holdings (NASDAQ: SPWR) decreased between the March 15 and March 28 settlement dates.

However, SolarCity (NASDAQ: SCTY) saw short interest in its shares rise during that time, while short interest in GT Advanced Technologies (NASDAQ: GTAT) and Real Goods Solar (NASDAQ: RSOL) was essentially flat.

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

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

Advanced Energy Industries

This Fort Collins, Colorado-based company saw short interest drop more than 15 percent in early March to near 1.00 million shares, largely erasing a 22 percent gain in the previous period. The number of shares sold short represents less than three percent of the float.

In March, this maker of power conversion products saw an analyst's downgrade on weaker demand and increased competition. The company has a market capitalization of about $725 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 more than five percent higher than the current share price. That target is less than the recent 52-week high.

The share price has pulled back about five percent in the past month. But shares are up about 29 percent year-to-date. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.

First Solar

Short interest in this solar energy company fell almost 11 percent to 16.42 million shares during the period. That was the smallest number of shares sold short in at least a year, but it still represents more than 27 percent of the float.

This Tempe, Arizona-based company is expected to post strong year-over-year EPS and revenue growth for the quarter just completed. First Solar has a market cap of about $3.2 billion. The forward earnings multiple is lower than the industry average P/E ratio, and the return on equity and operating margin are in the red.

The consensus recommendation is to hold First Solar shares, and it has been for at least three months. The current share price is well above their mean price target, meaning analysts see no upside potential at this time. Although, the street-high price target is more than 17 percent higher than the share price.

Shares surged more than 45 percent earlier this month on strong guidance for 2013. The share price is up more than 16 percent year-to-date. Over the past six months, the stock has outperformed competitor SunTech Power and the broader markets.

SunPower

Shares sold short in this integrated solar products and services company declined more than 17 percent in late March to about 6.87 million. That was on top of a 16 percent drop in the previous period. The short interest has pulled back to about 17 percent of the float, but days to cover remained about three.

Headquartered in San Jose, California, this company has a market cap near $1.3 billion. Analysts expect year-over-year revenue declines in the current quarter and the one just completed. 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 the analysts polled is to hold shares, and it has been for at least three months. And note that the current share price has overrun the mean price target, suggesting that the analysts may have stopped paying attention.

The share price has rebounded from a pullback earlier this month, and shares are about 80 percent higher year-to-date. 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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