Short Interest Swings in U.S. Solar Stocks (AEIS, SCTY, WFR)
The short interest in solar-related companies based in the United States was mixed in the latter two weeks of January.
Though the number of shares sold short in SolarCity (NASDAQ: SCTY) and SunPower (NASDAQ: SPWR) grew between the January 15 and January 31 settlement dates, short interest in Advanced Energy Industries (NASDAQ: AEIS), First Solar (NASDAQ: FSLR), GT Advanced Technologies (NASDAQ: GTAT) and MEMC Electronic Materials (NYSE: WFR) declined during that time.
Also, U.S.-listed shares (or ADRs) sold short of Canadian Solar (NASDAQ: CSIQ), China Sunergy (NASDAQ: CSUN), J.A. Solar Holdings (NASDAQ: JASO), ReneSola (NYSE: SOL), Suntech Power Holdings (NYSE: STP) and Yingli Green Energy (NYSE: YGE) also increased. But short interest in LDK Solar (NYSE: LDK) and Trina Solar (NYSE: TSL) declined.
The biggest percentage swings in short interest in the stocks of U.S. solar companies between the January 15 and January 31 settlement dates happened to Advanced Energy Industries, MEMC Electronic Materials and SolarCity.
Advanced Energy Industries
This maker of power conversion products saw short interest fall more than 21 percent in late January to 1.16 million shares. That was the lowest number of shares sold short in a year, as well as the largest average daily volume since July. Short interest is more than three percent of the float.
In late January, the company showcased its products at the SEMICON Korea exhibition in Seoul, introducing its Paramount 2 MHz power supply. The company has a market capitalization more than $600 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 11 percent, and the operating margin is greater than the industry average.
Only two of the seven analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, but none of them recommend selling. The current share price has overrun the mean price target, which is where the analysts expect the share price to go.
The share price has risen more than 38 percent over the past 90 days and reached a new 52-week high last week. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.
MEMC Electronic Materials
Shares sold short in this silicon wafer and solar energy services provider shrank more than seven percent in the period to about 16.62 million. The short interest has been falling since November and is now a little more than seven percent of the float.
Headquartered near St. Louis, this company operates more than 10,000 stores in 40 states, and it has a market cap near $1 billion. In January, MEMC launched its new Silvantis solar module, and a subsidiary set a deal to build a solar plant in Chile. While the company has a long-term EPS growth forecast of about 15 percent, its return on equity is in the red and the operating margin is less than the industry average.
The consensus recommendation of 18 analysts polled is to hold shares, with just six of them rating the stock at Buy or Strong Buy. And note that the mean price target is about the same as the current share price, indicating that the consensus is there is no upside potential.
The share price is up more than 30 percent year to date, but it is still down about 94 percent over the past five years. Still, the stock has outperformed Advanced Energy Industries and Solar City, as well as the S&P 500, over the past six months.
Short interest in this provider of solar energy systems to residential and commercial customers increased more than 13 percent to 2.35 million shares. The number of shares sold short now is about 16 percent of the float, and the days to cover has jumped to more than four.
In late January, Solar City opened a location on Long Island and it unveiled its broad homebuilder program at IBS 2013. The company now has a market cap of more than $1 billion. It currently has no long-term EPS growth forecast, and its operating margin is in negative territory.
But four of the six surveyed analysts recommend buying shares, while the other two recommend holding them. Again, the current share price is higher than the mean price target. However, the highest individual price target represents potential upside of about 14 percent. That target would be an all-time high.
The share price is up more than 35 percent year to date, though much of that gain came in the first week of the year. Over the past three months, the stock has outperformed the Nasdaq and the S&P 500.
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