On the Radar: Evergreen Solar, Solarfun Power, and Suntech Power

5/5/2010 12:30 PM

So, it seems that the concept of the solar-stock trifecta is a recurring theme this week. Thanks to a total dud of an earnings report and the work of one very industrious equities analyst, a trio of solar stocks appeared on my radar bright and early today. Read on to find out what's happening with Evergreen Solar, Inc. (ESLR), Solarfun Power Holdings Co., Ltd. (SOLF), and Suntech Power Holdings Co., Ltd. (STP).
Evergreen Solar, Inc. (ESLR) has backpedaled nearly 3% this afternoon as traders react to the company's earnings report. ESLR swung to a wider-than-expected first-quarter loss, and warned that it expects price declines during the second half of the year. As a result, the shares are now testing short-term technical support at the $1.10 level.
On the heels of this news, call volume on ESLR has surged to 17 times the norm, with more than 5,000 contracts changing hands. The stock's June 1 call has seen 5,010 contracts trade on open interest of 2,314, revealing that new positions are being added at this strike today.
Meanwhile, Solarfun Power Holdings Co., Ltd. (SOLF) has battled back from an early dip to gain 1.4% this afternoon. Wells Fargo started coverage of the stock with an "outperform" rating, with analyst Sam Dubinsky observing that SOLF is "leaving the penalty box" due to management changes and an improved cost structure. (The prolific Dubinsky initiated coverage of no fewer than six solar stocks today.)
The bullish note could be prompting short sellers to hit the exits, as 10.3% of the equity's float is dedicated to short interest. At SOLF's average daily trading volume, this translates to about 2.4 days' worth of pent-up buying pressure.
Finally, Suntech Power Holdings Co., Ltd. (STP) is off 2.8% as we enter the second half of the session, as traders seem none too impressed by the stock's new "market perform" rating from Wells Fargo. The stock has now gapped below short-term resistance from its 10-day and 20-day moving average, and it's testing support in the $12.50 region.
In today's session, the most active STP option is the June 15 put, with 873 contracts crossing the tape. About 79% of these contracts have traded at the ask price, and implied volatility is up 4.1% at last check. In other words, it looks as though traders are adding new bearish bets at this strike today.-posted by Elizabeth Harrow (eharrow@sir-inc.com)5/5/2010 12:30 PM