Source: Thinkstock
How the mighty have fallen. Only Canadian Solar now trades above its share price of six years ago, and once mighty Suntech is in bankruptcy and likely will be carved up when it emerges. The only stock trading at anything resembling those earlier nosebleed levels is SolarCity Corp. (NASDAQ: SCTY), which went public just last December and rose to more than 300% of its IPO price earlier this year before dropping about half that gain. Except for Suntech, all these stocks have posted gains in 2013, from around 24% at First Solar to more than 300% at SunPower and Canadian Solar.
Investors are anticipating consolidation in the Chinese solar sector, where Yingli, Canadian Solar and Suntech ply their trade, while U.S. makers First Solar, SunPower and SolarCity have focused on design, engineering and system installation to stage a comeback — or in SolarCity’s case a burst of excitement.
We thought we’d take a look at these companies to try to determine if opportunity for value still lurks in the once-high flying sector.
First Solar Inc. (NASDAQ: FSLR) closed at at $37.45 on Friday and is trading around $38.17 Monday morning. The company has a market value of around $3.73 billion. The consensus target price from Thomson Reuters is $41.61, and the 52-week range is $19.68 to $59.00. First Solar does not pay a dividend. The implied upside to the consensus target is 11%, and note that the target is well above the 52-week high. Short interest in the stock totals 11.24 million shares, or 22% of the float.
SunPower Corp. (NASDAQ: SPWR) closed Friday at $23.05 and is trading at around $23.58. The company has a market value near $2.86 billion. The consensus target price is $27.67, and the 52-week range is $3.90 to $28.15. SunPower does not pay a dividend. The implied upside to the consensus target is 20%, but that the target is below the 52-week high. Short interest in the stock totals 10.88 million shares, or 26.1% of the float.
SolarCity Corp. (NASDAQ: SCTY) closed Friday at $29.61 and trades around $29.76. The company has a market value of about $2.33 billion. The consensus target price is $37.00, and the 52-week range is $9.20 to $52.77. SolarCity does not pay a dividend. The implied upside to the consensus target is 25%, and that the target is well above the 52-week high. Short interest in the stock totals 4.36 million shares, or 20.2% of the float.
Canadian Solar Inc. (NASDAQ: CSIQ) closed at $13.77 on Friday and is trading at $14.09 Monday morning. The company has a market value of around $620 million. The consensus target price is $19.75, and the 52-week range is $1.95 to $16.40. Canadian Solar does not pay a dividend. The implied upside to the consensus target is 43%, and that the target is above the 52-week high. Short interest in the stock totals 2.45 million shares, or 8.1% of the float.
Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) closed Friday at $5.59 and trades around $5.56. The company has a market value of near $869 million. The consensus target price is $3.52 and the 52-week range is $1.25 to $5.87. Yingli does not pay a dividend. The stock already trades higher than its consensus target price, meaning there is no implied upside. Short interest in the stock totals 10.28 million shares.
Suntech Power Holdings Co. Ltd. (NYSE: STP) closed Friday at $1.15, and anyone still holding Suntech shares will be lucky to get a dime on a dollar once the company’s bankruptcy reorganization is complete.
First Solar’s stock is nearest to being fully valued, while analysts still see upside in SunPower and SolarCity. SunPower has had the biggest run-up this year, and after a slight slide in August, is once again turning up. SolarCity’s slide has not really turned around yet.
Among the Chinese players, Yingli already trades above its consensus target and would seem to be a good candidate for a short play. Suntech is dead money, and Canadian Solar, though its implied gain resembles a value trap, expects to post a profit for the full fiscal year as margins have improved significantly.
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