Market Overview

Short Interest Surges in Solar City, Falls in Advanced Energy (AEIS, SCTY, SUNE)

Among U.S. solar-related stocks, Advanced Energy Industries (NASDAQ: AEIS), SolarCity (NASDAQ: SCTY) and SunEdison (NYSE: SUNE) saw the most significant swings in short interest in early September.

Real Goods Solar (NASDAQ: RSOL) and SunPower Holdings (NASDAQ: SPWR) saw short interest in their shares grow somewhat between the August 30 and September 13 settlement dates.

The number of shares sold short in First Solar (NASDAQ: FSLR) and GT Advanced Technologies (NASDAQ: GTAT) decreased modestly in the most recent period.

Furthermore, the number of U.S.-listed shares (or ADRs) sold short of foreign-based companies Canadian Solar (NASDAQ: CSIQ) and Suntech Power Holdings (NYSE: STP) grew in the period.

But short interest in 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) shrank.

See also: Short Interest Moves in Facebook, Google

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

Advanced Energy Industries

This maker of power conversion products saw short interest retreat about 10 percent in the period to less than 870,000 shares. The number of shares sold short has declined for four consecutive periods to more than two percent of the float. The days to cover dropped from about four to less than three.

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 near $710 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 more than 31 percent.

Only three of the eight analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, while two rate it at Underperform. But their mean price target, which is where the analysts expect the share price to go, suggests there is more than 18 percent potential upside.

The share price has fallen more than five percent over the past month, though it is still up more than 24 percent year-to-date. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.

SolarCity

Short interest in this provider of solar energy systems to residential and commercial customers surged about 31 percent to 5.56 million shares. The number of shares sold short was more than 20 percent of the total float, and the highest since SolarCity began trading publicly in mid-December.

This San Mateo, California-based company completed an acquisition and announced a financing deal during the period. It has a market cap of less than $3 billion, but it does not offer a dividend. The long-term earnings per share (EPS) growth forecast is about 33 percent, but the return on equity is in the red.

None of the seven surveyed analysts recommends buying shares, while six of them recommend holding shares. The analysts' mean price target suggests that there is more than six percent potential upside. However, that target is much less than the post-IPO high reached in May.

The share price has retreated more than seven percent in the past week, though it is still up more than 179 percent since the beginning of the year. Over the past three months, the stock has outperformed the Nasdaq and the S&P 500, as well as the likes of Renesola.

SunEdison

The number of shares sold short in the former MEMC Electronic Materials rose more than six percent in the period to more than 21.70 million, or more than nine percent of the float. That was on top of a 21 percent increase in the previous period. Days to cover was more than two at mid-September.

One of the world's largest solar installers and developers, SunEdison announced a public offering of shares during the period. The company has a market cap of less than $2 billion. While it has a long-term EPS growth forecast of about 15 percent, its return on equity and operating margin are in negative territory.

Nine of the 15 analysts surveyed recommend buying SunEdison shares, with two of them rating the stock at Strong Buy. Their mean price target indicates they see more than 20 percent potential upside. But note that the consensus target is less the 52-week high reached back in July.

The share price has yet to fully recover from a more than 36 percent retreat in August, though it is up more than 137 percent since the beginning of the year. Over the past six months, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices (NASDAQ: ADI), as well as the broader markets.

See also: BioMarin, Celgene Lead Trend in Biotech Short Interest

At the time of this writing, the author had no position in the mentioned equities.

Posted-In: Advanced Energy Industries analog devices applied materials canadian solar China Sun Energy First SolarShort Ideas Trading Ideas Best of Benzinga

 

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