LDK Contract Boosts Other Solar Stocks
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LDK Solar (NYSE: LDK) today announced it has signed a contract spanning 10-years with a German based company, Q-Cells. This mornings announcement has caused shares of LDK Solar to surge by more than 17%, also boosting the stock of other solar companies due to a potentially "brighter" outlook throughout the industry.
Besides LDK, shares of Canadian Solar (Nasdaq: CSIQ) are feeling the greatest upside pressure today, rising more than 8% to a new 52-week high at $24. Elsewhere in the industry, Solarfun Power Holdings (Nasdaq: SOLF) stock is up more than 7% and shares of the industries largest producer of solar modules, First Solar (Nasdaq: FSLR) are lagging, 'only' up by about 3%.
Solar companies are on an absolute tear lately: all the companies just mentioned are up at least 125% in the last six months. Specifically, LDK is up 128%, Canadian Solar has risen by 142%, Solarfun is up 215%, and First Solar's stock price has gained more than 230% since June of this year.
With so much capital appreciation in such a short period of time, these solar stocks have also been heavily shorted recently, and probably rightly so. This could mean that today's rally in the solar industry might be getting intensified by a short squeeze. During the last month, short interest on each of these solar stocks, save Solarfun, has drastically increased. LDK Solar has seen short interest increase by 6.4% in the 15 days from November 15 to November 30, while Canadian Solar's short interest has risen by 6.5% and First Solar shorts have gone up by 4.2%. Solarfun was the only solar stock that marked a decrease in short interest, but it was not substantial, losing only about 0.06% of shorts.
As a stock price rises, short investors, who want the stock price to decline, are losing money and consequently need to cover their shorts, or buy the stock back, driving the stock price higher, in order to stop losing money.
Besides LDK, shares of Canadian Solar (Nasdaq: CSIQ) are feeling the greatest upside pressure today, rising more than 8% to a new 52-week high at $24. Elsewhere in the industry, Solarfun Power Holdings (Nasdaq: SOLF) stock is up more than 7% and shares of the industries largest producer of solar modules, First Solar (Nasdaq: FSLR) are lagging, 'only' up by about 3%.
Solar companies are on an absolute tear lately: all the companies just mentioned are up at least 125% in the last six months. Specifically, LDK is up 128%, Canadian Solar has risen by 142%, Solarfun is up 215%, and First Solar's stock price has gained more than 230% since June of this year.
With so much capital appreciation in such a short period of time, these solar stocks have also been heavily shorted recently, and probably rightly so. This could mean that today's rally in the solar industry might be getting intensified by a short squeeze. During the last month, short interest on each of these solar stocks, save Solarfun, has drastically increased. LDK Solar has seen short interest increase by 6.4% in the 15 days from November 15 to November 30, while Canadian Solar's short interest has risen by 6.5% and First Solar shorts have gone up by 4.2%. Solarfun was the only solar stock that marked a decrease in short interest, but it was not substantial, losing only about 0.06% of shorts.
As a stock price rises, short investors, who want the stock price to decline, are losing money and consequently need to cover their shorts, or buy the stock back, driving the stock price higher, in order to stop losing money.
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