Archive for June, 2013

Stock to watch – TSLA (Tesla Motors)

A stock that I’ve found to be very intriguing is the electric car company Tesla Motors ($TSLA). They have had quite the price run-up in the last couple of months. On April 1st, they were sitting at 43.93 at the close. On May 28th, they closed at their highest closing price of 110.33. That’s a whopping 151% gain! Quite the impressive ride!

The company was founded by Elon Musk, the co-founder of PayPal and founder of SpaceX. Needless to say, here’s someone that has been very successful in previous ventures and not someone you typically want to bet against. His previous success certainly draws you to look much more closely at Tesla.

As a recent article in Forbes suggests in its title, “Tesla Stock Today Looking A Lot Like General Motors In 1915“. In reading what they had to say, I’d have to say I’d agree that there are certainly a lot of similarities to what GM tried and was able to do. Such as being innovative and bringing the V-8 engine to market. How they grew the business and took the auto industry with them. Or how similar the price of the stock has moved in the same sort of time frame for both companies at the start.

Tesla is doing things in total contrast to what the rest of the auto industry is doing when it comes to electric cars. They have found a way to make a flashy sports car with power, but uses no gasoline. They have a network of charging stations going across the country so folks will have a place to plug up and within 20 minutes they can be on their way with a full charge. They are willing to sell a car directly to you without the need of a dealer. They make something that looks sharp and performs at a high level. I’d say that makes it worth a look.

Certainly the auto industry is being a bit taken aback by Tesla and have to go back to the drawing board to try and keep up. Auto dealers don’t like the fact that Tesla is willing to work with you directly instead of having to go to them first. So in some states they are either suing or trying to get legislation in place so that Tesla can’t sell directly to the consumer. I personally think going after them on that is just ridiculous. Why do we need to go through a dealer?

In any event, there are parallels between Tesla and how GM started off and grew by being on the cutting edge and innovative. The guiding hand from Elon Musk is one I think you have to bet on as he has a great track record.

They showed their first profit at their last report and I think it will only grow as time goes on. Especially as they work on bringing a car to production that is meant for the mass consumer at a much lower price point.

So, I suggest that you look for a spot to pick up some shares when it takes a bit of a dip so that you have a good entry point. This is a stock I would suggest holding onto for the long haul. I see this as a stock that has the potential of great long term growth like Google and Apple has showed us. I would say in the next five to ten years, you’ll wish you had bought more shares of this stock when you had the opportunity.