Short Sellers Still Favor Real Goods Solar, Solar City (AEIS, RSOL, SCTY)

By Benzinga | June 27, 2013 AAA

Among U.S. solar-related stocks, Advanced Energy Industries (NASDAQ: SCTY) saw significant upswings in short interest between the May 31 and June 14 settlement dates.

GT Advanced Technologies (NASDAQ: STP) also saw short interest in their shares grow somewhat.

But the number of shares sold short in First Solar (NASDAQ: FSLR) and SunEdison (NYSE: SUNE) (formerly MEMC Electronic Materials) decreased in the early weeks of June.

Furthermore, the number of U.S.-listed shares (or ADRs) sold short of foreign companies China Sunergy (NASDAQ: CSUN), JA Solar Holdings (NASDAQ: JASO), LDK Solar (NYSE: LDK), ReneSola (NYSE: SOL), Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) grew in the period, while short interest in Canadian Solar (NASDAQ: CSIQ) shrank.

Here is a quick look at how Advanced Energy Industries, Real Goods Solar and SolarCity have fared and what analysts expect from them.

Advanced Energy Industries

This maker of power conversion products saw short interest rise almost nine percent in early June to 1.30 million shares. The number of shares sold short has been larger in only one period since January. Short interest is more than three percent of the float, and days to cover rose to more than five.

The company has not fallen short of consensus earnings estimates in recent quarters, and revenue is expected to be up more than 20 percent in the current quarter. Its market capitalization is more than $650 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 about 15 percent.

Only three of the eight analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, while two rate the stock at Underperform. But their mean price target, which is where the analysts expect the share price to go, suggests there is more than 16 percent potential upside.

The share price has fallen more than nine percent over the past month, though it is still up more than 17 percent year-to-date. The stock has outperformed competitor MKS Instruments (NASDAQ: MKSI) and the broader markets over the past six months.

Real Goods Solar

Short interest in this solar installation services provider increased from about 1.14 million shares on May 31 to more than 1.26 million shares by mid-June. That was largest number of shares sold short in the past year, and it represents more than nine percent of the company's total float.

Real Goods Solar's chairman of the board resigned in June and a director was appointed to replace him. The Louisville, Colorado-based company now has a market cap of near $75 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 also 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. However, it is still more than 200 percent higher year-to-date. So, of course the stock has outperformed the Nasdaq and the S&P 500 over the past six months, and even competitor SolarCity.

SolarCity

Short interest in this provider of solar energy systems to residential and commercial customers increased about eight percent to 4.51 million shares. The number of shares sold short was more than 18 percent of the float, and the greatest since SolarCity began trading publicly in mid-December.

Shares of this San Mateo, California-based company got a bump in mid-June from an analyst's upgrade. SolarCity now has a market cap of less than $3 billion, but it does not offer a dividend. The long-term earnings per share (EPS) growth forecast is about 33 percent, but the return on equity is in the red.

None of the five surveyed analysts recommends buying shares, while four of them recommend holding shares. The current share price is higher than the analysts' mean price target. Though the highest individual price target represents marginal potential upside, it too is much less than the post-IPO high in May.

The share price has retreated about 20 percent in the past month, though it is still up more than 203 percent since the beginning of the year. Over the past three months, the stock has outperformed the Nasdaq and the S&P 500, as well as the likes of Renesola.

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