3 Solar Stocks With Short Interest Worth Watching

The short interest in Vivint Solar Inc VSLR rose by a double-digit percentage between the November 28 and December 15 settlement dates.

Among the other leading U.S. solar-related stocks, First Solar, Inc. FSLR and SolarCity Corp SCTY also saw a bump in the number of their shares short in the period.

First Solar

Short interest in this Tempe, Arizona-based company grew almost 6 percent, reversing three periods of decline, to land on 8.94 million on December 15. The number of shares sold short represents more than 12 percent of the float. The days to cover rose to four for the first time since September.

During the period, First Solar teamed up with the Clean Energy Collective to develop and build community solar projects. First Solar has a market capitalization of more than $4 billion. Note that its return on equity is less than 9 percent, but the operating margin is better than the industry average.

The consensus recommendation of the analysts polled by Thomson/First Call is to hold First Solar shares, and that has been the case for at least three months. Yet, the analysts' mean price target, or where they expect the share price to go, is more than 26 percent higher than the current share price.

The share price fell more than 14 percent during the two-week short interest period, part of a sell-off that began back in September, but it may have found a bottom in mid-December. The stock has underperformed not only the likes of Linear Technology and Sharp over the past six months, but the S&P 500 as well.

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SolarCity

Short interest in this provider of solar energy systems to residential and commercial customers saw a gain of more than 7 percent to around 18.64 million shares. That was the highest number of shares short in the past year, and it represents about 33 percent of the float. The days to cover remained more than seven.

During the period, this San Mateo, California-based company set a financing deal with Bank of America to fund solar power projects through 2015. SolarCity has a market cap of more than $5 billion. Note that both the return on equity and the operating margin remain in negative territory.

Nine of the 11 surveyed analysts recommended buying shares, and none rated the stock at Underperform. A move to the analysts' mean price target would be a whopping 34 percent gain for the shares. However, that consensus target is less than the 52-week high reached back in February.

Short sellers watched the share price retreat less than 10 percent during the two-week period but then rise about 15 percent since then, climbing well about the 50-day moving average. The stock may have underperformed the Nasdaq and the S&P 500 in the past six months, but it outperformed smaller competitor RGS Energy.

Vivint Solar

The number of shares sold short in this company jumped more 26 percent in the period to around 2.18 million, or more than 10 percent of the float. That is the greatest number of shares short since Vivint came public last fall. It would take about two days to close out all of the short positions.

This Provo, Utah-based provider of residential solar energy systems announced plans to open 20 new offices in 2015. Vivint has a market cap near $1 billion. The return on equity is in negative territory. Analysts anticipate net losses in the current quarter and the next, as well as for the full year.

All but one of the five analysts polled recommend buying Vivint shares, with one of them rating the stock at Strong Buy. They see plenty of headroom for shares, as their mean price target indicates more than 53 percent potential upside. That consensus target would be a post IPO high as well.

The share price fell almost 19 percent during the period. It has largely recovered since then but remains below the 50-day moving average and down about 41 percent since the IPO in October. In that time, the stock has outperformed the other two stocks featured here, as well as the S&P 500 and the Nasdaq.

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And Others

Short interest grew more modestly in SunEdison and SunPower in early December, while short sellers shied away from Advanced Energy Industries and RGS Energy.

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

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