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Short Sellers Still Like Real Goods Solar (FSLR, RSOL, SUNE)

July 26, 2013 3:27 pm
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Short Sellers Still Like Real Goods Solar (FSLR, RSOL, SUNE)

Among U.S. solar-related stocks, First Solar (NASDAQ: FSLR), Real Goods Solar, (NASDAQ: RSOL) and SunEdison (NYSE: SUNE) saw the most significant swings in short interest in the most recent period.

Advanced Energy Industries (NASDAQ: AEIS) saw short interest in its shares grow somewhat between the June 28 and July 15 settlement dates.

But the number of shares sold short in GT Advanced Technologies (NASDAQ: GTAT), SolarCity (NASDAQ: SCTY) and SunPower Holdings (NASDAQ: SPWR) decreased in the final weeks of June.

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

But short interest in LDK Solar (NYSE: LDK), ReneSola (NYSE: SOL), Trina Solar (NYSE: TSL) Yingli Green Energy (NYSE: YGE) shrank.

Here is a quick look at how First Solar, Real Goods and SunEdison have fared and what analysts expect from them.

First Solar

Short interest in this solar energy company declined more than 17 percent to around 11.23 million shares during the period. That was the smallest number of shares sold short in at least a year, but it still represents more than 16 percent of the float. Days to cover rose to more than two for the first time since May.

In July, BlackRock (NYSE: BLK) reduced its stake in this Tempe, Arizona-based company. First Solar has a market capitalization of about $4 billion. It offers no dividend. The price-to-earnings (P/E) ratio is lower than the industry average, and the operating margin is higher than the industry average.

The consensus recommendation of analysts surveyed by Thomson/First Call is to hold First Solar shares, and it has been for at least three months. The current share price is well above their mean price target, meaning analysts see no upside potential at this time.

The share price is more than 57 percent higher than six months ago, despite pulling back more than three percent in the past week. The stock has outperformed the likes of Linear Technology (NASDAQ: LLTC) and Sharp, as well as the broader markets, over the past six months.

See also: First Solar to Build New Mexico Solar Projects Totaling 23MW for PNM

Real Goods Solar

The short interest in this solar installation services provider rose more than 20 percent to around 2.62 million shares by the middle of July. The number of shares sold short has increased in the past four consecutive periods and now represents more than 19 percent of the company’s total float.

Real Goods Solar’s chairman of the board resigned back in June and a director was appointed to replace him. The Louisville, Colorado-based company now has a market cap of near $64 million. Note that its return on equity and operating margin are both in negative territory.

Though the consensus recommendation previously had been to hold shares, no analysts have been surveyed by Thomson/First Call recently. That means there is no current mean price target. Given the stock’s recent volatility, a consensus price target might mean little anyway.

The share price spiked more than 247 percent to a multiyear high in mid-May, but it quickly retreated. Shares have traded mostly between $2 and $3 since then. Over the past six months, the stock has outperformed competitor SolarCity, as well as the Nasdaq and the S&P 500.


The number of shares sold short in the former MEMC Electronic Materials declined more than eight percent in the period to about 13.64 million, or about six percent of the float. That followed a more than 18 percent drop in short interest in the previous period. Days to cover remained at more than three.

Headquartered near St. Louis, SunEdison is one of the world’s largest solar installers and developers, and it has a market cap above $2 billion. It also remains one of the world’s biggest semiconductor wafer suppliers. While it has a long-term EPS growth forecast of more than 12 percent, its return on equity is in the red.

Nine of 17 analysts surveyed recommend buying shares, with three of them rating the stock at Strong Buy. Here too, the share price has overrun their mean price target. However, the street-high price target suggests there may be 25 percent potential upside.

The share price is up more than 21 percent in the past month and reached a new 52-week high earlier this week. Over the past six months, the stock has outperformed the likes of Advanced Energy Industries and Analog Devices (NASDAQ: ADI), as well as the Dow Jones Industrial Average.

See also: Short Sellers Continue to Pile on KLA-Tencor

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