Why Tesla (NASDAQ: TSLA) is one of the S&P 500’s best buys
With the stock market having fallen sharply in recent trading sessions, investors would likely expect a high beta tech stock like Tesla (NASDAQ: TSLA) also be significantly lower. This is surprisingly not the case, as the EV company has shown serious relative strength amid the weakness in the market. This could be a sign that Tesla is gearing up for a year-end rally, especially considering the fact that the stock has remained neutral for most of 2021.
While Tesla’s current valuation may raise eyebrows for investors keen on fundamental analysis, the company’s unique brand and its status as a market leader in the electric vehicle industry still make it one of the most intriguing companies. today. According to MarketBeat, there are even analysts bold enough to set a target price of $ 1,200 on the stock, which implies massive upside potential.
The truth is, Tesla might be one of the best stocks to consider buying into the S&P 500 right now, and here are a few reasons why:
It’s a disruptive business in growing markets
Sometimes it pays to keep it simple when it comes to investing. We know how many governments and businesses are focusing on clean energy sources as an alternative to fossil fuels, and this trend will only accelerate in the years to come. For example, consider the Biden administration’s $ 7.5 billion plan to expand electric vehicle charging to underserved areas. This is one of the main reasons Tesla could offer a strong outperformance in the long run, as it is a company that is disrupting both the automotive and power generation sectors with technology from peak clean energy.
The global electric vehicle market is expected to reach around $ 725 billion by 2026 and international markets like China and Europe are experiencing huge demand for these vehicles. Tesla is well positioned to expand internationally in these high growth markets with a gigafactory in Shanghai and a planned gigafactory in Berlin. Tesla is also investing heavily in R&D to reduce manufacturing costs and improve technology, which could at some point enable mass adoption of electric vehicles. Sustainable power generation products such as solar panels, solar roofs and batteries are also an underrated aspect of Tesla’s business, especially with the global renewable power generation market, except growth at a CAGR of 7.9% from 2020 to 2027.
The first luxury electric vehicle brand
Tesla has come a long way from a rambling start-up to a renowned luxury automaker with 3 of the 5 best-selling electric vehicles in the United States in the second quarter of 2021. Much of this has to do with the brand’s branding. business, which is another important reason. consider adding actions. Sure, other automakers are getting into the electric vehicle business and trying to capture market share from Tesla, but it’s hard to replicate intangibles as a strong brand. Early investors have certainly been rewarded for embracing the vision of charismatic company CEO Elon Musk, and it’s fair to say that the Tesla brand is stronger than ever right now.
Tesla’s constant technological innovation has been one of the main catalysts that has helped the development of the company’s brand. Tesla’s vehicles, for example, boast top-notch battery life and the ability to handle transmission updates with a simple Wi-Fi or cellular connection. The company’s extensive network of compressors can deliver a full battery charge in under an hour. In addition, luxury car buyers are often interested in exclusivity and speed, and the Tesla Model S Plaid can go from 0 to 60 miles per hour in under 2 seconds, making it one of the cars fastest production lines in the world and delivers these qualities in spades. These are all unique innovations that have helped Tesla grow its brand, and it’s hard to imagine another competitor stealing the crown for luxury electric vehicles anytime soon.
Constant improvement in income
Finally, investors should be very optimistic about Tesla’s recent earnings history as the company steadily improves its financial results. Tesla achieved an industry-leading 6.3% operating margin in fiscal 2020 as well as an increase in 2020 EPS of 7,367% year-over-year. These results were all the more impressive as many automakers struggled to cope with the impacts of the pandemic. It is clear that the company is heading in the right direction in terms of profit growth, and in 2021 the trend has continued so far.
Tesla topped $ 1 billion in GAAP net income in the second quarter for the first time in company history. The company also reported a 97% increase in second quarter year-over-year revenue and saw significant growth in vehicle deliveries, which is noteworthy given the global shortage of semiconductors. The bottom line here is that if Tesla can continue to drive profit growth, lower operating costs, and produce more innovation, the sky is the limit for shareholders.
Tesla is part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
Should you invest $ 1,000 in Tesla right now?
Before you consider Tesla, you’ll want to hear this.
MarketBeat tracks Wall Street’s top-rated and top-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts quietly whisper to their customers to buy now before the broader market takes hold of… and Tesla was not on the list.
While Tesla currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better bets.
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