Short Sellers Still Retreating From Solar Stocks
By and large, short interest for the leading U.S. solar-related stocks continued to shrink between the March 31 and April 15 settlement dates.
The retreat by short sellers was especially notable in Advanced Energy Industries, Inc. (NASDAQ: AEIS), First Solar, Inc. (NASDAQ: FSLR) and Solaredge Technologies Inc (NASDAQ: SEDG) in the most recent period.
Below is a quick look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at short interest moves in other leading solar stocks.
Advanced Energy Industries
The number of shares short in this maker of power conversion products shrank around 12 percent to more than 902,000. That was a little more than 2 percent of the total float. Also, it was the lowest level of short interest, and the first time at less than 1 million, in the past year.
During the period, the company announced that it had appointed a new chief financial officer. Its market capitalization is near $1 billion. The price-to-earnings (P/E) ratio is lower than the industry average, and the operating margin is greater than the industry average.
Six of the eight analysts who follow the stock and were surveyed by Thomson First Call recommend buying shares, with four of them rating it at Strong Buy. The mean price target, or where analysts expect the share price to go, is more than 10 percent higher than the current share price.
The share price ended the two-week short interest period about where it began it, though it has declined about 2 percent since then. The 50-day moving average has acted as resistance recently. Over the past six months, the stock has outperformed competitor MKS Instruments and the broader markets.
Short interest in this Tempe, Arizona-based company shrank less than 10 percent during the period to around 7.20 million shares, or 9.8 percent of the float. That was the smallest number of shares short in at least a year. Note that short interest also declined about 10 in previous two-week period as well.
Analysts are beginning to see the potential boost First Solar may get from its yieldco with SunPower. First Solar has a market cap of about $6.4 billion. Its operating margin is better than the industry average, and its P/E ratio is less than the industry average.
The consensus recommendation of the analysts polled is to hold shares, and that has been the case for at least three months. Not much surprise that they see little headroom for stock, as their mean price target is less than 2 percent higher than the current share price.
First Solar shares rose about 5 percent during the short interest period and has added more than 3 percent since then. The stock has outperformed the likes of Linear Technology and Sharp over the past six months. It also outperformed the Nasdaq and the S&P 500 in that time.
Short interest in this maker of PV solar panel components plunged more than 64 percent to less than 70,000 shares during the period, its second since its initial public offering. That mid-April reading represents less than 1 percent of the float, and the days to cover was, not surprisingly, less than one.
Deutsche Bank recently initiated coverage on the stock with a Buy rating, citing the Israel-based company’s competitive advantage and growth potential. It has a market cap of less than $950 million. Its operating margin is in the red and the return on equity is less than 3 percent.
As this company only went public quite recently, there are no analyst recommendations listed yet. However, five analysts have price targets, ranging from $28.00 to $31.00. From last week’s close of $24.89, that suggests upside over the next year in a range of about 11 percent to almost 20 percent.
Short sellers watched the stock rise almost 10 percent during the short interest period, and it is up more than 20 percent since the IPO. In that time, SolarEdge shares have outperformed not only the two other stocks featured here, but the broader markets as well.
Short sellers also retreated from SunEdison, SunPower, TerraForm Power and Vivint Solar in the first two weeks of the month. However, Real Goods Solar and SolarCity saw marginal bumps in short interest during the period.
Among foreign-based solar companies, the number of U.S.-listed shares (or ADSs) sold short in China Sunergy, JinkoSolar and Yingli Green Energy also shrank during the period. However, Canadian Solar, Hanwha Q CELLS, JA Solar Holdings, ReneSola and Trina Solar saw gains in their short interest.
At the time of this writing, the author had no position in the mentioned equities.
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