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Brand Face-Off: Canadian Solar Inc. vs. Yingli Green Energy Hold. Co. Ltd. (ADR)

Evaluating CSIQ and YGE from technical and sentiment viewpoints

by 5/5/2014 2:02:08 PM
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Alternative energy rivals Canadian Solar Inc. (NASDAQ:CSIQ) and Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) have both rallied significantly in the past year. CSIQ has nearly quintupled in value over the last 12 months to trade at $26.93 -- and that's despite pulling back nearly 10% in 2014. In addition, the shares have been consolidating atop their 200-day moving average of late, which coincidentally acted as a level of support just over one year ago.

Meanwhile, YGE's performance on the charts -- while impressive on an absolute basis -- pales in comparison to that of its sector peer. Specifically, the stock has gained about 38% year-over-year to rest at $3.13. The last four-plus months haven't exactly helped Yingli's technical picture, though, as the shares have shed 38% in 2014, with a recent rally attempt stymied by their descending 32-day moving average.

Daily Chart of CSIQ since January 2013 With 200-Day Moving Average
Chart courtesy of StockCharts.com

Daily Chart of YGE since January 2014 With 32-Day Moving Average
Chart courtesy of StockCharts.com

On the sentiment front, however, option bulls have preferred Yingli Green Energy to Canadian Solar. The former's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio registers at a miniscule 0.05, with long calls outnumbering long puts by about a 20-to-1 margin in the last two weeks. What's more, this ratio ranks near the bottom one-third of readings from the last year, indicating speculators have preferred bullish bets over bearish more strongly than usual of late.

By contrast, CSIQ's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.08 indicates long puts have outstripped long calls recently. More significantly, this ratio is just 4 percentage points shy of an annual bearish acme. If Canadian Solar can resume its longer-term uptrend, an unwinding of these bearish bets could supercharge the rally.

Elsewhere, neither stock has received much attention from Wall Street. While YGE has received just one "strong buy" rating and three "hold" opinions, its consensus 12-month price target of $5.88 sits at an astounding 88% premium to the current share price. This leaves the door wide open to potential bearish initiations and/or price-target reductions.

Meanwhile, four out of five covering analysts have given CSIQ a "buy" or better recommendation. Although this reveals optimism among the brokerage bunch, the shares could still benefit from additional optimistic notes on the Street.

All things considered, it's safe to say that Canadian Solar Inc. (NASDAQ:CSIQ) is the winner of this Brand Face-Off. After all, the stock stands to benefit from unwinding pessimism in the options pits and more positive attention from the analysts. On the other hand, from a contrarian perspective, Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) could be vulnerable if the option bulls change their tune and/or the brokerage bunch sours even more on the shares.

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