Market Overview

These 3 Solar Stocks Catch The Eye Of Short Sellers

These 3 Solar Stocks Catch The Eye Of Short Sellers

Among the leading U.S. solar-related stocks, First Solar (NASDAQ: FSLR), GT Advanced Technologies (NASDAQ: GTAT) and SolarCity (NASDAQ: SCTY) saw the largest upswings in the number of their shares sold short in the first two weeks of August.

However, short interest dwindled in Advanced Energy Industries, RGS Energy, SunEdison and SunPower between the July 31 and August 15 settlement dates.

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

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

See also: Watch Solar Stocks Following Back-To-Back Industry Earnings Misses

First Solar

Short interest in this Tempe, Arizona-based company rose nearly eight percent to land on about 10.33 million shares on August 15. That was the second highest number of shares sold short this summer, and it represents about 14 percent of the float. The days to cover dropped to about three.

Project delays got the blame for a plunge in earnings during the second quarter, and the company cut its production forecast. It has a market capitalization of near $7 billion. Note that the price-to-earnings (P/E) ratio is less than the industry average and the operating margin is greater than the industry average.

The consensus recommendation of the analysts surveyed by Thomson/First Call is to hold First Solar shares, though it has more buy recommendations now than a month ago. Note though that the mean price target, or where analysts expect the share price to go, is less than current share price.

Short sellers watched shares rise more than nine percent during the two-week period, but shares now are up nearly 24 percent year to date. The stock has outperformed not only the likes of Linear Technology and Sharp over the past six months, but the Nasdaq and the S&P 500 as well.

GT Advanced Technologies

This Nashua, New Hampshire-based company saw short interest swell more than 17 percent in the first weeks of the month to almost 56.54 million shares, or more than 41 percent of the float. The number of shares short has been on the rise since the end of June. Days to cover rose to more than six.

During the period, the company posted a smaller-than-expected net loss and raised its guidance for the full year. GT Advanced Technologies has a market cap of more than $2 billion. While the long-term earnings per share (EPS) growth forecast is more than 40 percent, the return on equity is in the red.

Of the 12 analysts surveyed, seven of them recommend buying shares, but that is fewer Buy ratings than two months ago. The mean price target suggests that the analysts see less than three percent potential upside. And note that shares traded higher than that as recently as the beginning of July.

Shares gained more than 25 percent during the two-week period, rising above the 50-day moving average again. The share price now is up more than 90 percent year to date. The stock has outperformed larger competitor Applied Materials and the broader markets over the past six months.

See also: Phone Arena Says Sapphire Glass Unlikely to be Ready for iPhone 6 September Launch


After rising less than three percent in the previous period, the rate of change quickened to more than six percent in early August. The more than 12.06 million shares short was more than 23 percent of the total float. The average daily volume increased during the period, so the days to cover fell to less than three.

SolarCity reported a sharp rise in quarterly revenue and a smaller-than-expected net loss in the period. It has a market cap of more than $6 million. Note that both the operating margin and the return on equity are in negative territory. The company is expected to post net losses for both this year and the next.

Of the 11 analysts who follow the stock, nine recommend buying shares, with three of them rating the stock at Strong Buy. While a move to their mean price target would be a gain of more than 17 percent for the shares, that consensus target is less than the 52-week high from early this year.

The share price ended the two-week short interest period in the same neighborhood where it began, though it has slipped a bit since. The 50-day and 200-day moving averages formed a golden cross in late July. The stock has outperformed competitor RSG Energy and the broader markets over the past six months.

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

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