Tesla Motors (TSLA)
And finally, we come to Tesla Motors (TSLA), the designer and manufacturer of electric vehicles.
Few stocks can match Tesla on pure sex appeal. In an age when it is economically sensible, politically correct and even trendy to be green (how often do economically sensible, politically correct and trendy all overlap?), TSLA is justifiably a stock that gets its share of attention. InvestorPlace’s Kyle Woodley made it his entry in the Best Stocks for 2014 contest, and through early February he’s running away with it. The stock is up 29% year-to-date after more than tripling in 2013.
There’s just one problem. Tesla doesn’t actually make money. TSLA lost $147 million over the past 12 months on revenues of $1.7 billion.
Tesla is expected to turn a profit this year, but investors have long since baked this into the stock price. TSLA stock trades for 117 times expected 2014 earnings and 12 times sales (in the trailing 12 months). As a point of comparison, General Motors (GM) trades for 7 times expected earnings and 0.3 times sales.
I know. Tesla is the future, and General Motors is the past. Except General Motors also is active in both electric cars and hybrids. GM announced last year that it planned to bring to market an electric vehicle that can go 200 miles between charges that costs about $30,000. Tesla’s Model S can go longer between charges — 265 miles — but also costs more than twice as much, at $71,000.
And let’s face it, electric cars are still pretty terrible to drive. Hybrids offer better range and better power and still go a long way towards satisfying modern green sensibilities. The same is true about natural-gas-powered heavy-duty trucks, built using engines built by Cummins (CMI) and others.
TSLA is sexy. But it is priced to break your heart.
Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long WMT and CMI. Check out his new premium service, Macro Trend Investor, which includes a free copy of his e-book, The New Megatrend Investor: The Ultimate Buy-and-Hold Strategy That Will Make You Rich.