Tesla could be the greatest stock story in years
Here's why you'd be crazy not to buy shares of the electric-vehicle manufacturer.
Some stocks are considered good values, with attractive fundamental metrics such as a low price-to-earnings (P/E) ratio, a low price-to-book ratio, and so on. Some stocks are great technical plays, forming bullish double-bottom or cup-and-handle chart patterns.
Then there are some companies whose stocks that power higher because they have a genius CEO who brought a product to market at just the right time.
Tesla Motors (TSLA) is one of the latter -- and the way I see it, you'd be crazy not to own the stock at current levels.
The following price metrics should give you a sense of the power of this stunning electric-car maker's draw:
-- Up 12 percent in three months (through April 23 close)
-- Up 35 percent year to date
-- Up just shy of 300 percent in one year
-- Up 756 percent since its June 29, 2010 IPO
The numbers don't lie. Investors have embraced Tesla CEO Elon Musk, the electric vehicle growth story and the enormous game-changing potential that this company brings to the automotive industry.
Tesla took another step forward this week, as it began selling its signature Model S sedans in the biggest auto market in the world, China. It just delivered its first eight vehicles to Chinese customers, with Musk on hand to celebrate the company's milestone.
During a media event in Beijing, Musk said he plans to invest several hundred million dollars to build a nationwide network of electric charging stations to service what he thinks will be a burgeoning market in China for Tesla. Yet Musk didn't stop there -- he also said Tesla intends to manufacture vehicles in China.
China-based production of Tesla vehicles would allow the company to sell its Model S sedans for a lot less than the current $121,000 price tag. While U.S. consumers shell out $81,000 for the vehicle, China imposes a 25 percent import tariff in addition to shipping costs. And, of course, the production in China would allow Tesla to deliver vehicles to Chinese buyers more quickly.
The China news sent TSLA spiking more than 6 percent, but I think this is just one of many big trading days on the horizon for this stock.
Despite the gains so far in 2014, TSLA is actually off about 18 percent from its all-time high, made in late February. The move has taken shares down below their 50-day moving average.
Yet, it is partially because a little of the fat has been trimmed off the stock that makes buying TSLA here even more of a no-brainer. Think of it this way: You are getting perhaps the greatest stock story in years -- and what I suspect will be one of the greatest stock stories of the next five years -- at a big discount.
Action to take:
-- Buy TSLA at the market price
-- Set stop-loss 10 percent below entry price
-- Set initial price target at $279 for a potential 28 percent gain in four months
StreetAuthority LLC does not hold positions in any securities mentioned in this article.
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Amazon has a system that would be extremely costly to duplicate. Cracker Barrel Old Country Store has locations that are now on prime, expensive land. They would be difficult to reproduce. But what does Tesla have? Technology that can be studied and easily copied.
The last time I saw people oohing and ahing like this over some tech story, it was laser eye correction in the 1990's. A company called VISX had all the big patents and even Jim Jubak said that if he had to leave for a 10-year trip to Mars and had to put all his money in one stock, it would be VISX. But VISX had no durable competitive advantages. It's patents were tied more to programming than to hardware. It had no patent on lasers. It had no patent on lenses. It had no patent on computers. And soon it had virtually worthless stock.
Does anyone need any more proof that the Talking Heads for Wall Street have Zero integrity. I love the Tesla Story and root for the CEO to succeed beyond even his wildest Dreams. I believe this company could be a Global Game Changer. However nobody with a honest bone in their body will sale investors this type of Pie in the Sky Talk.
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