Every stock analyst has a number of stocks that they become quite familiar with, whether it’s because they grow to understand the cyclical nature of the stocks, or because they’ve had long-term success with a buy-and-hold strategy. For me, Tesla, Inc. (TSLA) is one of those stocks. My original recommendation to my readers was back in 2011, when TSLA stock was trading at 29. Readers who followed my advice and held now have profits of more than 960%.
But more important for you—particularly if you are not a Tesla shareholder yet—is that now is a great time to buy the stock.
Five Reasons to Buy TSLA Stock
1. The technical chart pattern offers low risk and high reward.
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My biggest reason for bullishness on TSLA stock now is technical. This weekly chart shows the stock’s big run from 180 in November 2016 to 387 in June 2017, for a gain of 115%. Since that peak, the stock has been digesting that gain, consolidating in a range between 300 and 380 while the company’s fundamentals catch up, and the longer this phase lasts, the stronger that base at 300 gets. Thus, buying TSLA near 300 is a low-risk high-reward proposition.
2. Elon Musk is one of the most visionary managers of our era.
He created Tesla from nothing, leapfrogging the big established automotive companies as quickly as one of his cars blowing the doors off a Cadillac.
He built the battery gigafactory in Nevada, whose output exceeds that of all pre-existing battery factories combined.
He acquired a solar roof company, so that consumers could power both their homes and their cars from the sun using an integrated system that includes Tesla batteries.
In his spare time he built SpaceX, which developed reusable rockets, thus enabling satellite launches far more cheaply than NASA or Russia could achieve.
Then—in a brilliant piece of public relations—he sent one of his own Tesla Roadsters into orbit around the sun—where it will stay for millions of years—just because he could.
And just last Wednesday, Tesla shareholders reaffirmed their confidence in him when they approved the world’s most ambitious performance-based pay package—a package that could pay him more than $50 billion over the next ten years if the company’s value climbs to $650 billion.
I think he’ll earn it.
3. Last week’s Uber fatality in Tempe, Arizona helps to build the bottom for TSLA stock.
A cardinal rule of investing is that bad news builds bottoms and good news builds tops. The first (and apparently only) fatality of a self-driving Tesla back in June 2016 sparked some quick panic selling that provided a good buying opportunity (TSLA climbed higher for the next five weeks), and the fatality caused by the autonomous Uber fatality may well do the same.
4. Production of the mass-market Model 3 is ramping up.
Sure, it’s behind schedule but that’s normal—even expected— for Musk. The company’s target for the end of March was 2,500 Model 3 vehicles per week, and industry observers now say that weekly production is nearing 2,000 vehicles.
5. TSLA is a great way to diversify your portfolio.
The majority of stocks march to the beat of the same drummer. As a result, the bull market of the past 17-plus months means a lot of stocks are at risk of giving back their gains—and your profits. But TSLA is frequently a market-contrary stock, and the fact that it’s sat out the past nine months of the bull market, building a base above 300, means that risk is low—and capital appreciation potential is high.
If this all makes sense to you, you could simply invest right now. But what I really recommend is that you become a regular reader of my Cabot Stock of the Week, so that you can get weekly updates on Tesla stock, as well as my featured recommendation every week.
These featured recommendations are handpicked by me (the fancy word these days is curated) and combined into a well diversified top-performing investment portfolio.
In 2017, it gained 49.5%!
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditions
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditionsLearn More