Solar Stocks Shine as Short Interest Surges

Among U.S. solar-related stocks, Real Goods Solar RSOL, SolarCity SCTY and SunPower Holdings SPWR saw significant upswings in short interest between the Oct. 15 and Oct. 31 settlement dates.

The number of shares sold short in First Solar FSLR and SunEdison SUNE decreased by more than 10 percent during that period, and in Advanced Energy Industries AEIS and GT Advanced Technologies GTAT more modestly.

In addition, the number of U.S.-listed shares (or ADRs) sold short of foreign-based companies Canadian Solar CSIQ, China Sunergy CSUN, JA Solar Holdings JASO, LDK Solar LDK, ReneSola SOL, Suntech Power Holdings STP and Yingli Green Energy YGE also grew.

But short interest in Trina Solar TSL shrank in the period.

See also: Solar ETFs Heating Up

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

Real Goods Solar. The short interest in this solar installation services provider jumped more than 12 percent to a year-to-date high. More than 5.21 million shares were held short at the end of the month, or more than 28 percent of the float. Note that the number of shares held short was fewer than 4,000 a year ago.

This Colorado-based solar energy company announced the completion of a large project in Vermont at the end of October. The company has a market capitalization near $100 million. Its operating margin and return on investment are both in negative territory.

No analyst surveyed by Thomson/First Call follows this stock any longer, so at this time there is no consensus recommendation, mean price target or implied upside.

The share price has risen about 34 percent in the past month and is up about 326 percent since the beginning of the year. Over the past six months, the stock has outperformed not only competitor SolarCity but also the broader markets.

SolarCity. Short interest in this provider of solar energy systems to residential and commercial customers also grew to a year-to-date high, more than 8.47 million shares. The number of shares sold short was almost 28 percent of the total float. The days to cover was about one, though.

This San Mateo, Calif.-based company broke ground on a project in Connecticut in October. SolarCity has a market cap of more than $4 billion, but it does not offer a dividend. The long-term earnings per share (EPS) growth forecast is more than 34 percent, but the return on equity is in the red.

Only one of the seven polled analysts recommends buying shares. The consensus recommendation has been to hold shares for the past three months. The analysts' mean price target implies potential upside of about 12 percent. But note that shares traded higher than that as recently as last week.

Shares are up more than 13 percent in the past month, and the share price is more than 49 percent higher than six months ago. In that time, the stock has outperformed the Nasdaq and the S&P 500, but it has underperformed competitor ReneSola.

See also: SunPower Announces Acquisition of Greenbotics

SunPower Holdings. The number of shares sold short in this integrated solar products and services company increased more than 16 percent in the period to about 13.78 million. That too was a year-to-date high, as well as about 33 percent of the total float. The days to cover remained more than three.

Headquartered in San Jose, Calif., this company has a market cap of almost $4 billion. It reported strong third-quarter results but offered disappointing guidance. While the company has a long-term EPS growth forecast of about 30 percent, its return on equity and operating margin are in the red.

The consensus recommendation of 14 analysts polled is to hold shares, and it has been for at least three months. And note that the current share price and the mean price target are about the same, suggesting the analysts see no upside potential at this time.

However, the share price is up more than 11 percent in the past month, as well as about 73 percent higher than six months ago. The stock has outperformed competitors First Solar and Suntech Power, as well as the S&P 500 and the Nasdaq, over the past six months.

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