The Skies are Grey for These 3 Solar Stocks

Solar stocks have struggled in the second quarter, according to the Guggenheim Solar ETF's historical price action

Mar 28, 2017 at 2:13 PM
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Solar stocks have been in a long-term downtrend, as evidenced by the price action in the Guggenheim Solar ETF (TAN). Year-over-year, the exchange-traded fund (ETF) have shed more than 22%. Based on its current perch at $17.31, TAN is within a chip-shot of its Dec. 30 three-year low of $16.45. More clouds could be on the horizon for solar shares, too, per data from Schaeffer's Senior Quantitative Analyst Rocky White. TAN has been one of the worst ETFs in the second quarter since it began trading in 2008 -- turning in a positive performance just 38% of the time, and averaging a loss of 0.3%. Drilling down on TAN holdings, Canadian Solar Inc. (NASDAQ:CSIQ)First Solar, Inc. (NASDAQ:FSLR), and SunPower Corporation (NASDAQ:SPWR) have struggled along with the sector. Here's a quick look at how CSIQ, FSLR, and SPWR have done on the charts, and why the stocks could see more weakness in the near term.

Short Sellers Could Create Bigger Problems for Canadian Solar Stock

CSIQ stock has shed nearly 40% in the last 12 months, though the shares were last seen trading up 2.5% at $11.61. Nevertheless, the stock's most recent rally attempt was quickly halted in the $15.50-to-$16.00 region, home to CSIQ's May lows and October highs. Short sellers have been quick to bet on more downside, too. Short interest on Canadian Solar Inc. surged 6.6% in the most recent reporting period, and now accounts for 14.2% of the stock's available float. A continued burst of short selling could increase selling pressure on CSIQ -- and create additional headwinds for the solar shares.

First Solar Shares at Risk of Bearish Brokerage Backlash

Shares of FSLR -- which recently lost their spot on the S&P 500 Index (SPX) -- have edged 0.2% higher today to trade at $28.30. However, the stock has surrendered more than 59% of its value over the past 52 weeks, and hit a nearly four-year low of $27.75 yesterday. Short interest has been increasing on FSLR, too, up 10.6% in the two most recent reporting periods to 18.6 million shares -- the most since January 2013. While more short selling could translate into continued losses for First Solar, Inc. shares, a round of bearish brokerage notes could also push FSLR lower. Despite the stock's withstanding technical troubles, five analyst still maintain a "strong buy" rating.

SunPower Shares Could Find New Lows Should Analysts Act

SPWR is down roughly 72% year-over-year, and tagged a four-year low of $5.84 on March 22 -- prompting one brokerage firm to lower its outlook for SunPower stock. There's still room for analysts to downwardly revise their ratings and price targets, though, which could create more trouble for SunPower Corporation stock. Currently, three of 16 analysts recommend buying the embattled solar stock, while not one deems it a "sell." Plus, the average 12-month price target of $8.78 stands at a 42.2% premium to SPWR's present perch at $6.18. Short sellers are easily in control on the stock, too. Short interest jumped 8% in the most recent reporting period to a near-record 20.1 million shares.

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