by Alyssa Oursler | December 17, 2013 6:00 am
It almost goes without saying that Tesla (TSLA) has been the darling of Wall Street in 2014. Every time skeptics said it couldn’t keep climbing, TSLA stock gave them the middle finger and soared even higher.
Even factoring in recent weakness — namely, a 35% sell-off from October to mid-November in the wake of three Tesla fires — TSLA has whopping 335% gains in the books. Heck, Tesla stock is up around 10% in the last month alone, even as the broader market has been more or less flat.
The latest catalyst for this hot electric-vehicle maker? The German Federal Motor Transport Authority said the Tesla Model S was cleared of any defect — news that sent Tesla stock up almost 17% in one day.
Still, past performance is hardly an indicator of future performance … and the real question isn’t whether Tesla stock had an awesome year (because, duh, yes) but whether it can continue to deliver sweet returns as we ride into the new year.
So we asked a few InvestorPlace experts just that.
Is Tesla stock a smart buy heading into 2014? Read on to find out whether our top contributors think you should snag some TSLA shares.
By Jim Woods
Editor-at-Large, The Wealth Shield
Tesla stock has been one of the best performers in the market over the past several years, with TSLA soaring over 700% since the company went public in June 2010. But should you buy Tesla stock heading into the new year? Hell yes! Three quick reasons why:
Tesla earnings.Third-quarter Tesla earnings report showed non-GAAP EPS of 12 cents, firmly above consensus. Gross margins also were strong for TSLA, coming in at 21.5% (excluding zero emission vehicle credits). That metric was a big jump from the 14% gross margin number last quarter. If TSLA can continue delivering earnings beats, it will be a bullish foundation for Tesla stock.
Genius factor. Part of the reason why Tesla stock has been such a winner is the confidence in its genius CEO Elon Musk. The billionaire isn’t your average make-the-trains-run-on-time CEO. Elon Musk is an entrepreneur dedicated to changing the way society does things … a rare individual that creates massive wealth through a genius idea and the ability to make that idea a reality.
Potential. As a car guy, and as someone who has had the pleasure of driving a Tesla, I can unequivocally say that this vehicle is stunning in both appearance and performance … and really is in a class by itself. So if you’re someone who likes to invest in companies with massive growth potential, and not someone who merely likes to trade ticker symbols, you want to snag this game-changing company.
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.
By Kyle Woodley
InvestorPlace Deputy Managing Editor
No investment is a sure thing, but buying Tesla Motors (TSLA) was a quick decision for me. TSLA stock is propelled by so many corporate qualities that really hit home for me. For instance, Tesla has a…
Genius leader. This is important, because not all great tech minds are great leaders. Former Groupon (GRPN) CEO Andrew Mason is the poster child for this. Tesla CEO Elon Musk might come across as a little brash in his tweets, but there’s no denying both the genius and the ability to run a business. Musk threw his resources into PayPal, which eventually sold to eBay (EBAY) for $15 billion and became the premiere name in online payments. His SpaceX just brought a satellite into orbit. And concerning Tesla itself, Musk has brought a pure electric vehicle company to an operating profit and enormous stock gains. That’s thanks to a…
Great product. Bicker about the three car fires all you want, but I’m taking Germany’s word for it that Tesla ain’t to blame. Musk has helped create not just a functional electric vehicle, but a sleek, aesthetically pleasing, technologically impressive badass of an electric vehicle. In fact, Tesla’s product is so great that the company has a…
Dedicated fanbase. Now, I will say that “dedicated fanbase” can sometimes be switched out for the term “cult following,” and depending on how small that cult is, that’s not necessarily good for business. But word-of-mouth recommendations for Tesla border on the starry-eyed, as if their owners can’t believe they get to drive such a thing. Among the rich, that counts for something, and will go a long way toward building its…
Currently small numbers. Small numbers are great because they’re easy to improve by large percentages. Tesla is expected to sell 21,500 Model S units this year. Some analysts think the company could push out 100,000 vehicles annually in just three years. Even if Tesla never touches the millions in unit production achieved by Ford (F) and General Motors (GM), who cares? That kind of growth will carry TSLA stock for years.
In short, buy TSLA stock and start worrying when there’s something to worry about.
As of this writing, Jeff Reeves, Jim Woods and Kyle Woodley were long TSLA.
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