Follow Me Into Tesla Stock
By Jeff Reeves
Editor, InvestorPlace.com and The Slant
I am personally long in Tesla stock, since I bought in around $130 on the recent dip. Here are my reasons:
Valuations are honest again: TSLA was too hot at $190, but the recent sell-off has provided some realism — and the bears who bet against Tesla have cashed out.
The Tesla brand is powerful: Forget the kerfuffle over recent vehicle fires — Tesla still is a powerful brand with consumers. The Model S got the highest-ever rating for an automobile from Consumer Reports and the government’s highest safety rating. Tesla’s customers are evangelists of the brand. TSLA is synonymous with electric vehicles, and that will serve the company very well.
Tesla’s growth is real: Amid all this talk of new Tesla vehicle lines and Wall Street sentiment, it’s easy to overlook the fundamentals that led to this meteoric rise in Tesla stock. The company doubled revenue from $204 million in 2011 to $413 million in fiscal 2012. This year, revenue will hit $2.3 billion — yes, with a “B” — in fiscal 2013. Furthermore, Tesla turned its first quarterly profit in the first quarter ahead of schedule and is now operating in the black. But next year, earnings will jump from just a few cents a share to more than $1.40 per share, according to estimates.
Production is booming: And in case you’re worried this growth won’t keep up, remember that Tesla raised more than $300 million in 2013 via a secondary stock offering, and recently entered into China and Europe to sell its Model S sedans. Capacity continues to increase, but a backlog remains.
In short, I believe the correction in TSLA stock provided an opportunity to enter at a fair price and still consider it a buy.