As this will be one of our last articles of 2020, we’re going to take a look at the top-performing stock from the MyWallSt shortlist this year, Tesla (NASDAQ: TSLA).
It seems that Tesla is in every headline this week, having been added to the S&P 500 on Monday, followed by CEO Elon Musk’s revelation that he once tried to sell the company to Apple — who are now making their own electric vehicles it seems. The latter announcement has really brought Tesla’s longevity as a growth stock into question as yet another titan of industry joins the ever-growing list of EV manufacturers.
Tesla trades at about 15x projected 2021 revenue and about 175x projected earnings, it manufacturers barely a fraction of what its rivals such as Ford and General Motors do, and yet it’s easily the most popular trade among investors, with shares up roughly 650% year-to-date.
But can this last into 2021 and beyond?
Should investors still take a chance on Tesla?
After yesterday’s bearish article about fuboTV, and because it’s so close to Christmas, I’m going with a bull argument today.
Tesla has shown remarkable growth this year. In its latest earnings report, Tesla posted its fifth-straight quarter of profitability, generating $1.4 billion in free cash flow. Its total revenue grew by 39%, and it posted record numbers in deliveries, profitability, and free cash flow. Even during a pandemic, Tesla has managed to generate profit and increased growth.
Production of the exciting ‘Million Mile’ battery is in the works and should be seen by the end of 2020. This battery could revolutionize the electric car industry and indeed make certain arguments around ‘range anxiety’ in electric vehicles redundant. Additionally, by increasing the battery life, the overall cost of owning a Tesla car could be reduced, making it accessible to more people.
In this regard, Tesla is a great company for innovation and for development, particularly as it continues to plow ahead with its new Gigafactory in Germany. Now, with more plans on the table for a new factory in the U.S. and another in Asia, we can expect to see this company continuing to lead the pack in electric vehicle production for the foreseeable future.
So, is Tesla stock a buy?
Investors must take into consideration both its current market cap and the increased competition in the space. Can bullish investors see Tesla as the next trillion-dollar company? Or will the new electric wave see its growth stall? I believe that with Tesla stock, anything can happen, but as it stands it seems likely to keep on growing.
So here’s to more in 2021.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free access now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.