Buy Tesla Now, Even After the Rebound

Don’t try to time this stock [View in browser]( BROUGHT TO YOU BY: Editor’s Note: It’s Friday. Time to give you a stock pick from our sister newsletter, The Spill, so you can think about it over the weekend and maybe make a move Monday morning. While The Juice helps you be better with money across the board, The Spill focuses on stocks financial pros are researching and judges how good of buys they are. If you’re already sold, you can[sign up for The Spill – for free – here](. Proprietary Data Insights Financial Pros Automaker Stock Searches in the Last Month Rank Name Searches #1 Tesla 24,533 #2 Ford Motor Company 3,590 #3 Rivian Automotive 2,281 #4 General Motors Company 1,223 #5 Toyota Motor Company 212 #ad [Where the Big Money’s Looking]( Fiona [Get Smart About Savings]( Your money is in a bank account that’s paying 0% interest, now’s the time to move it to a high-yield savings account. Fiona is an online comprehensive marketplace where you can compare savings accounts and rates from top providers in one place. ● APYs 11x the national average ● It’s quick! Open your account in minutes online ● Safe: FDIC Insured up to $250K ● No minimum balance or monthly fees for most accounts [Compare Rates Now]( *Based on the FDIC National Average of 0.21% APY at FDIC banks as of 10/17/2022 and rates listed on Fiona from its banking institution advertisers. Consumer Cyclical Buy Tesla Now, Even After the Rebound Financial pros are hot on Tesla (TSLA). Our latest data from Trackstar, our proprietary sentiment indicator, shows it’s financial pros’ top stock search this month and last week, beating out Apple (AAPL) and Amazon (AMZN). Over the last month, Tesla shares have rallied about 90% thanks to an outstanding Q4 earnings release from the company, which showed it achieved its highest-ever quarterly revenue, operating income, and net income. TSLA’s revenues grew 51.4% in 2022, and it’s planning to ramp up production as quickly as possible, with the 50% compound annual growth rate target it began guiding to in early 2021. Still, many investors fear CEO Elon Musk lost focus when he gave his attention to Twitter. And the market for electric vehicles continues to get more competitive. But read on for why we think Tesla is a good investment, despite all the headwinds facing it. Tesla’s Business Tesla is the world’s most valuable automaker, with a market cap of more than $650 billion. The company specializes in EVs, energy storage, and solar panel manufacturing. It operates factories in the U.S., China, and Europe and has delivered over 1 million EVs to customers worldwide. It’s at the forefront of autonomous driving technology. Its vehicles feature advanced driver assistance systems. It released Full Self-Driving (FSD) capability to nearly all customers in the U.S. and Canada who bought FSD, but it falls well short of Level 5 technology – the kind where you let the car drive without supervision. Still, it’s an important milestone for the company, as it gives customers AI-powered autonomy. Its business model focuses on direct sales to consumers, bypassing traditional dealership networks. The company generates a majority of its revenues from automobiles. Last year, it generated $71.4 billion, an increase of 51.4% from the year prior. The firm’s total revenues were $81.46 billion in 2022. [Financials] Source: Tesla Financials [Revenue] Source: Stock Analysis TSLA has more than doubled its revenues over the last two years, from $31.5 billion in 2020 to $81.4 billion in 2022. It significantly invested in autonomous driving tech, positioning itself as a leader in the field, increasing the value proposition of its vehicles, and attracting more customers. Net income more than doubled year over year, from $5.5 billion in 2021 to $12.5 billion in 2022. This was due to notable improvements in manufacturing efficiency and cost reduction, allowing Tesla to produce EVs for cheaper, increasing margins. The company has $22.1 billion in total cash and $5.7 billion in total debt. It’s financially stable, with a current ratio (current assets divided by current liabilities) of 1.5x (the higher the ratio, the better financial position a company is in). Valuation [Cash] Source: Seeking Alpha TSLA trades at a P/E GAAP (price-to-earnings generally accepted accounting principles) ratio of 52.5x, considerably cheaper than peers Ford (F) and Rivian (RIVN), as both those companies aren’t profitable. But TSLA trades at a premium over Toyota (TM) at 11.5x and General Motors (GM) at 6.7x. Tesla’s price-to-sales ratio of 7.3x is notably lower than its five-year average of 9.9x. But it’s significantly higher than peers TM at 0.9x, GM at 0.4x, and F at 0.3x. RIVN is the highest among the group at 15.4x. Tesla is not only the undisputed leader in EVs. It also has the best autonomous driving technology, which is why some analysts believe it should trade at a premium over its peers. Investors once valued Tesla as a tech company. Though that fervor has subsided, the upside potential still exists should the company finally crack the AI-driving code. Profitability [Turnover] Source: Seeking Alpha TSLA boasts a net income margin of 15.4%, which is incredible when you consider its five-year average is 0.1%. The company has successfully expanded into China and Europe, where there’s strong demand for EVs, allowing it to diversify its revenue streams and reduce dependence on the U.S. market. Its net income margin is significantly higher than peers TM at 7.4%, GM at 6.3%, F at -1.3%, and RIVN at NM (not meaningful). The company’s autopilot, FSD, and software have boosted margins, as they add revenues without any variable costs. And Tesla has more levers it can pull for profits, like battery, powertrain manufacturing, energy storage, solar, and services. Growth [Growth] Source: Seeking Alpha Consumers cut their spending in 2022 for fear of a possible recession. But they didn’t stop buying Tesla cars. As we noted, the company grew revenues 51.4%, significantly more than TM at 7.3%, GM at 23.4%, and F at 15.9%. Rivian’s revenues grew 104,800%, but the company made only $55 million the year prior. Over the last three years, Tesla has grown revenues an average of 49.1%, compared to TM at 2.9%, GM at 4.5%, and F at 0.5%. (RIVN IPOed in late 2021.) [Crypto ATMs Are Popping Up Worldwide]( Stay on top of these investment trends with credible alternative investment articles and videos directly in your inbox with our hand-curated newsletter. [Click here to sign up.]( Our Opinion 8/10 While some analysts may not like TSLA due to its valuation, we argue that the company has a huge technological edge over its competitors, which makes us believe it can continue to grow at the pace it has. In addition, it has the highest operating and profit margins among its peers. While it makes most of its money from cars right now, it has several levers it can pull for future growth. Tesla is a hard stock to try to time. That’s why we think you should just own it and add on dips. To get content like this daily, sign up for The Spill for free[here](. Share on: mailto:?body=https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D572539 News & Insights Freshly Squeezed - [The Stock Market Is Off to a Great Start In 2023 – Here’s How the Federal Reserve, Interest Rates May Change That]( - [Your One-Stop Shop for FREE Stock Picks]( - From The Spill: [Add AAPL to Your Portfolio, Just Not Right Now]( [We want to hear from you! Let us know your thoughts by clicking here]( [Link]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [allow us on your list]( Juice&email=TheJuice@news.investingchannel.com). Update your email preferences or unsubscribe [here](. Manage your subscriptions with our [preference center](. View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or eliminate losses. InvestingChannel, Inc., makes no representation or implication that using any of the methodologies or systems in this newsletter will generate returns or insure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.