Market Overview

Short Interest In Solar Stocks Is Mixed (AEIS, SUNE, SPWR)

Among leading U.S. solar-related stocks, Advanced Energy Industries (NASDAQ: AEIS), SunEdison (NYSE: SUNE) and SunPower Holdings (NASDAQ: SPWR) saw the most significant swings in short interest between the November 15 and November 29 settlement dates.

The number of shares sold short in Real Goods Solar and SolarCity increased somewhat in the period, while short sellers shied away from First Solar and GT Advanced Technologies.

Furthermore, the number of U.S.-listed shares (or ADRs) sold short of foreign-based companies Canadian Solar, China Sunergy and JA Solar Holdings also shrank.

But short interest in LDK Solar, ReneSola, Trina Solar (NYSE: TSL) and Yingli Green Energy grew in the period.

See also: Short Sellers Climb Aboard The Twitter Train

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

Advanced Energy Industries

This maker of power conversion products saw short interest increase more than 15 percent in the period to more than 911,000 shares. That was the greatest number of shares sold short since August, and it represented more than two percent of the float. The days to cover rose to about two.

Analysts way overestimated earnings per share (EPS) in the past two quarters but still expect strong earnings and revenue growth in the current quarter. The company's market capitalization is near $860 million. The price-to-earnings (P/E) ratio is higher than the industry average, but the long-term EPS growth forecast is almost 34 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, is about 16 percent higher than the current share price.

The share price has fallen more than six percent over the past month, though it is still up about 54 percent year to date. The stock has underperformed not only competitor MKS Instruments over the past six months, but the broader markets as well.

SunEdison

After growing more than four percent in the previous period, the number of shares sold short in the former MEMC Electronic Materials dropped more than 17 percent in the period to more than 17.20 million, or more than six percent of the float. Days to cover was more than two at the end of November.

One of the world's largest solar installers and developers, SunEdison set a patent deal with Soitec during the period. SunEdison has a market cap near $3 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.

Ten of the 15 analysts surveyed recommend buying SunEdison shares, with two of them rating the stock at Strong Buy. They see room for shares to run, as their mean price target indicates about 14 percent potential upside. Shares have not traded at that level since February of 2011.

The share price has pulled back more than three percent from a recent multiyear high but is still more than 58 percent higher than six months ago. In that time, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices, as well as the broader markets.

See also: Biogen Idec, Pharmacyclics See Surges In Short Interest

SunPower Holdings

The number of shares sold short in this integrated solar products and services company increased more than eight percent in the period to about 14.67 million. That was the highest level of short interest so far this year, as well as almost 35 percent of the total float. The days to cover rose to more than four.

Headquartered in San Jose, California, this company has a market cap of more than $3 billion. It has seen strong growth in Japan, Europe, the Middle East and Africa. While the company has a long-term EPS growth forecast of about 30 percent, its return on equity is in the red.

The consensus recommendation of the 14 analysts polled is to hold shares, and it has been for at least three months. The analysts' mean price target suggests that there may be more than 11 percent upside potential. But note that the share price was higher than that as recently as just before Thanksgiving.

That is because the share price is down more than eight percent in the past month, though it is still more than 47 percent higher than six months ago. The stock has outperformed competitor First Solar, as well as the S&P 500 and the Nasdaq, over the past six months.

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

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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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