Editor’s note: This column is part of our Best Stocks for 2014 contest. Kyle Woodley’s pick for the contest is Tesla Motors (TSLA).
“This is for Venturi up in the booth thinking I should lay up.”
So said fictional golfer Roy “Tin Cup” McAvoy before plunking one of what would be many shots into the water on the par-5 18th in the U.S. Open, only to finally succeed in clearing the hazard after he’d blown the tournament.
Now, I’m harnessing that same “go crazy or go home” attitude with my pick of Tesla Motors (TSLA) for InvestorPlace’s Best Stocks for 2014 contest.
That’s right. I’m picking a stock to buy and hold in 2014 that has already run up a cool 300%-plus in 2013.
What could go wrong?
A lot, obviously. As was the case with McAvoy’s unshakable belief that he could bash the pellet some 230 yards over the pond and onto the green, I’m almost asking for TSLA stock to crash and burn in front of my very eyes. And frankly, that’d be a justifiable cooldown after Tesla made one of Wall Street’s most memorable momentum runs.
But I believe in Tesla stock so much, I’m going for broke.
Why You Should Buy Tesla Motors (TSLA)
In a recent roundtable of InvestorPlace experts, I listed several reasons for loving TSLA stock going forward in 2014. Here’s a breakdown:
- Tesla CEO Elon Musk is a candidate for all-time genius corporate chief. Technological brilliance and business acumen don’t always go hand in hand. Sometimes you get genius app makers who can’t handle the expectations of publicly traded life, and sometimes you get a savvy CEO who won’t even use email. But Elon Musk is the best of both worlds. The guy put a rocket into orbit, was responsible for evolving PayPal into an electronic payments titan, and he suggested a concept for a solar energy provider that turned into SolarCity (SCTY), which only became one of the hottest stocks of this year. Realize how silly that kind of resume is, and none of that even includes what he has done with his primary company. At Tesla Motors, Elon Musk has turned electric cars from geeky, unrealistic science fiction into sleek, sexy, desired and absolutely realistic automobiles. And at an operating profit, no less!
- Tesla cars are sweet. Battery fires aside — no, really, TSLA has been cleared by Germany, and that works for me — Tesla Motors also makes a slick product. The Tesal Model S sedan turns testers into buyers, and buyers into disciples. And while word of mouth alone is an especially strong selling point among the well-to-do, you know what else helps? Consumer Reports calling your car the best automobile it has ever tested. Folks, the Tesla Model S is essentially the ’85 Bears of automobiles.*
- Oh-so-much room to grow. So, Ford (F) sold around 2.17 million automobiles in the U.S. last year. If Ford would’ve wheeled around and sold another 4 million this year — growth of 86% — the NYSE probably would have to halt trading to administer smelling salts to Alan Mulally, passed out from giddiness over F stock shooting through the roof. It won’t, though, as Ford was sitting at 2.2 million units as of November. But wouldn’t you know it, that’s exactly what kind of unit explosion Tesla itself is targeting for next year. Yes, that’s an expectation, but TSLA ain’t half bad with managing expectations. The important thing to focus on here is Tesla’s small scale — that gives the company room to achieve the kind of eye-popping growth that gets investors all antsy in their pantsy.
Other possible TSLA stock propellants that are part and parcel of those expectations include Tesla’s recent expansion into China, as well as the anticipated mid-2014 production of the luxury Model X crossover. The rumor mill over a possible 2015 glimpse at the Model E — expected to compete on price against BMW’s 3-Series — also should keep the buzz meter on “high.”
And while this might not necessarily have too much impact on Tesla stock’s standing in the Best Stocks for 2014 contest, it still gives me a case of the grins: All-wheel drive is coming to Tesla. There were (as of now, mostly unfounded) rumors earlier this year that TSLA was considering throwing AWD into the Model S, but at the very least, we’re getting it in the Model X next year. Not that one should crow too much about practicality when discussing high-end, space-age electric vehicles, but rear-wheel drive just doesn’t cut it anywhere an actual winter takes hold.
So yeah, you’d better believe I’m bullish.
Still, I’d be remiss not to mention how rarely TSLA stock has had to face adversity in its publicly traded life. Plus, while 2013 was a banner year for positive headlines, when a formidable headwind did pop up — the series of Tesla fires starting in October — investors rapidly collected their winnings, sending TSLA stock down as much as 40% in a matter of months.
If something similar happens to TSLA stock in 2014, especially near year’s end, you can expect to see me careening down the scoreboard and into Best Stocks infamy.
But at least I didn’t lay up.
*Don’t even bring up the 1972 Miami Dolphins. Yes, they went wire-to-wire, but they did so with a garbage schedule.
Kyle Woodley is the Deputy Managing Editor of InvestorPlace and unofficially embarrassed the Best Stocks field in 2012. As of this writing, he was long TSLA.