Market Overview

Short Sellers Pile on to Real Goods Solar, Retreat from SunEdison (AEIS, RSOL, SUNE)

Among U.S. solar-related stocks, Advanced Energy Industries (NASDAQ: AEIS), Real Goods Solar (NASDAQ: RSOL) and SunEdison (NYSE: SUNE) saw the most significant swings in short interest between the June 14 and June 28 settlement dates.

GT Advanced Technologies (NASDAQ: GTAT) and SolarCity (NASDAQ: SCTY) saw short interest in their shares grow somewhat. But the number of shares sold short in First Solar (NASDAQ: FSLR) and SunPower Holdings (NASDAQ: SPWR) decreased in the final weeks of June.

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Furthermore, the number of U.S.-listed shares (or ADRs) sold short of foreign-based companies China Sunergy (NASDAQ: CSUN), JA Solar Holdings (NASDAQ: JASO), LDK Solar (NYSE: LDK), ReneSola (NYSE: SOL), Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) grew in the period, while short interest in Canadian Solar (NASDAQ: CSIQ) and Suntech Power Holdings (NYSE: STP) shrank.

Here is a quick look at how Advanced Energy Industries, Real Goods Solar and SunEdison have fared and what analysts expect from them.

Advanced Energy Industries

This maker of power conversion products saw short interest rise about eight percent in late June to 1.41 million shares. That was the largest number of shares sold short since January. Short interest was nearly four percent of the float, and days to cover fell from more than five to less than four.

The company has not fallen short of consensus earnings estimates in recent quarters, and revenue is expected to be up more than 20 percent in the current quarter. Its market capitalization is more than $845 million. The price-to-earnings (P/E) ratio is higher than the industry average, but the long-term earnings per share (EPS) growth forecast is about 15 percent.

Only three of the eight analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, while two rate the stock at Underperform. And their mean price target, which is where the analysts expect the share price to go, suggests there is more than six percent potential upside.

The share price has shot up about 23 percent over the past month and reached a multiyear high yesterday. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.

Real Goods Solar

The short interest in this solar installation services provider jumped more than 71 percent to more than 2.17 million shares by the end of June. That was by far largest number of shares sold short in the past year, and it represents about 16 percent of the company's total float.

Real Goods Solar's chairman of the board resigned in mid-June and a director was appointed to replace him. The Louisville, Colorado-based company now has a market cap of near $63 million. Note that its return on equity and operating margin are both in negative territory.

Though the consensus recommendation previously had been to hold shares, no analysts have been surveyed by Thomson/First Call recently. That means there is no current mean price target. Given the stock's recent volatility, a consensus price target might mean little anyway.

The share price spiked more than 247 percent to a multiyear high in mid-May, but it quickly retreated. However, it is still more than 180 percent higher year-to-date. So, of course the stock has outperformed the Nasdaq and the S&P 500 over the past six months, but it narrowly underperformed competitor SolarCity.

SunEdison

The number of shares sold short in the former MEMC Electronic Materials dropped more than 18 percent in the period to about 14.90 million. That was the lowest level of short interest in the past year, and it represented less than seven percent of the float. Days to cover was more than three.

Headquartered near St. Louis, this silicon wafer and solar energy services provider has a market cap of about $2 billion. In late June came news that Wells Fargo (NYSE: WFC) would fund $100 million in SunEdison projects. While SunEdison has a long-term EPS growth forecast of more than 12 percent, its return on equity is in the red and the operating margin is less than the industry average.

Nine of 17 analysts surveyed recommend buying shares, with three of them rating the stock at Strong Buy. But the share price has overrun their mean price target. The street-high price target suggests there may be 21 percent potential upside.

The share price is up more than 10 percent in the past month, and shares are trading near the recent 52-week high. Over the past six months, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices (NASDAQ: ADI), as well as the Dow Jones Industrial Average.

Posted-In: Advanced Energy Industries analog devices canadian solar China Sun Energy First Solar GT Advanced TechnologiesShort Ideas Trading Ideas Best of Benzinga

 

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