Market Overview

3 Solar Stocks With Short Interest Still Rising

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Among the leading U.S. solar-related stocks, GT Advanced Technologies (NASDAQ: GTAT), SolarCity (NASDAQ: SCTY) and SunEdison (NYSE: SUNE) saw significant increases in the number of shares sold short in the latter two weeks of May.

Short sellers shied away from First Solar and SunPower Holdings between the May 15 and May 30 settlement dates. But short interest in Advanced Energy Industries also increased during the period, and in RGS Energy it was about the same as in the previous period.

In addition, the number of U.S.-listed shares (or ADSs) sold short of foreign-based companies Canadian Solar, China Sunergy, JinkoSolar, ReneSola, Trina Solar and Yingli Green Energy grew, but short interest in Hanwha SolarOne and JA Solar Holdings shrank in the period.

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

GT Advanced Technologies

Short interest in this New Hampshire-based company has grown for eight straight periods to reach around 45.70 million by the end of May. That is about 34 percent of all shares available, and the greatest level of short interest since last August. The days to cover rose to more than six in the period.

The crystal growth equipment provider for the solar and electronics industries got a boost in the period as an iPhone screen supplier. The company has a market capitalization of more than $2 billion. The long-term earnings per share (EPS) growth forecast is almost 48 percent, but the return on equity and the operating margin are in the red.

All but three of the 11 analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares. That has been the consensus recommendation for the past three months. The mean price target, which is where the analysts expect the share price to go, is more than 15 percent higher than the current share price.

As of the close on Wednesday, the share price was up almost 22 percent in the past month and once again north of the 50-day moving average. The stock has outperformed not only larger competitor Applied Materials over the past six months, but also the Nasdaq and the S&P 500.

SolarCity

Short interest in this provider of solar energy systems to residential and commercial customers saw a gain of about seven percent to about 12.32 million shares in the two weeks. That was the third consecutive period of rising short interest, and it represents more than 26 percent of the float. The days to cover was about three.

This San Mateo, California-based company partnered with Groupon late in the period to supply residential solar systems. SolarCity has a market cap of less than $5 billion. Note that both the return on equity and the operating margin remain in negative territory.

Eight of the 10 polled analysts recommend buying shares, and only one rates the stock at Underperform. The ongoing pullback as left plenty of headroom for the stock, relative to the analysts' mean price target. But shares have traded higher than that consensus target as recently as early March.

Shares hit a year-to-date low in early May, and the 50-day and the 200-day moving averages formed a death cross at the end of the month. The stock has underperformed the Nasdaq and the S&P 500 in the past six months, but it has outperformed smaller competitor RGS Energy.

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SunEdison

The number of shares sold short in the former MEMC Electronic Materials increased more than five percent in the period to around 67.83 million, or more than 25 percent of the float. Short interest has been rising since the end of January. It would take more than four days to close out all of the short positions.

One of the world's largest solar installers and developers, SunEdison posted a wider-than-expected net loss in the period. SunEdison has a market cap near $5 billion. Here too, the return on equity and operating margin are in the red. Net losses are forecast for the current quarter and the full year.

Eleven of the 12 analysts polled recommend buying SunEdison shares, with four of them rating the stock at Strong Buy. They see plenty of headroom for shares, as their mean price target indicates more than 16 percent potential upside. That consensus target would be a new 52-week high.

The share price rose more than 13 percent during the period, but it has met resistance near $21 since March. It is above the 50-day moving average again. Over the past six months, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices.

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 applied materials canadian solar China Sun Energy First SolarShort Ideas Trading Ideas Best of Benzinga

 

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