Should I Buy Tesla Stock?

should i buy tesla stock

Tesla Motors Inc. (Nasdaq: TSLA) is one of the most talked-about stocks on the market. Today (Thursday), it's up 5% in pre-market trading after its famous Chief Executive Officer, Elon Musk, hinted at a major announcement to come on Oct. 9.

The constant media coverage has our readers asking us, "Should I buy Tesla stock? Is it too late to capture TSLA gains?"

While we're very bullish on Tesla's potential, as we'll talk about later, the answer to whether or not to buy is a bit more involved...

A Tesla Stock Overview

should i buy tesla stockThe first thing to know about TSLA is that it's one of the most volatile stocks on the market.

Seemingly every week the stock makes a major move depending on what type of news comes out about the company.

You see, Tesla is a leader in the electric vehicle industry, which is viewed as revolutionary by supporters and as impractical by detractors. When news breaks that supports either side of the argument, the stock sees huge price swings.

Last month, TSLA stock surged to an all-time high of $291.42 after the company announced it would bring its $5 billion Gigafactory to Nevada. The factory is expected to revolutionize the production of lithium-ion batteries. At that high, TSLA was up 14% in just 10 days. Since the start of 2013, the stock is up 586%.

However, the TSLA stock price dips have been just as dramatic.

On May 5, TSLA closed at $216.61. Just three trading sessions later, TSLA fell all the way to $178 per share - a nearly 18% drop - when the company reported quarterly profit fell to $17 million from $45.9 million on increased spending.

Currently, TSLA is at the low end of one of its price swings, having slipped 11% in the last month. Right now, TSLA trades near $40 per share.

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Because of those wild swings, Tesla stock is not for everyone. Investors turned off by short term risk will want to avoid TSLA because predicting the day-to-day swings for the stock are nearly impossible.

But for investors who are willing to hold on to a stock for a few years and assume some risk, TSLA stock is one of the best options on the market because of its serious growth potential - especially at today's discounted price.

Money Morning's Chief Investment Strategist Keith Fitz-Gerald has been following Tesla for years, and he thinks the stock could climb dramatically in the coming months and years.

"This company is on track to see a stock explosion that will make its surge back in the spring of 2013 look like a speed bump," Fitz-Gerald said.

Here are the driving forces that will push the Tesla stock price to new highs...

Why TSLA Stock Is Heading Higher

The first reason Fitz-Gerald is bullish on TSLA stock is the company's innovative CEO Elon Musk. Not only is he the man behind Tesla, but he's also the founder of PayPal, SpaceX, and SolarCity Corp. (Nasdaq: SCTY).

"You hardly ever see this recognized in the mainstream media, but Tesla has one irreplaceable asset that also happens to be its greatest advantage over its competitors," Fitz-Gerald said. "The company has been blessed with the most innovative CEO on the planet: Elon Musk."

"Creativity as a thinker who can't be boxed in by entrenched competitors, the ability to cheerfully put tens of millions of his own money behind his vision when necessary, a solid grasp of what technology means for the industry he operates in... all of these are great qualities in a CEO. Any company, big or small, is lucky to have a chief executive with just two of them. Tesla has all three in Elon Musk."

But Musk isn't the only reason to buy in on TSLA stock. Fitz-Gerald says the Tesla Gigafactory is another bullish catalyst for the company

Tesla's current timeline calls for construction to begin on the Gigafactory by the end of 2014. The plant is expected to be operational by 2017, and reach maximum output capacity by 2020. The final goal for the Tesla Gigafactory is to be able to supply power for more than 500,000 vehicles annually.

"The announced plans for what Tesla is calling a Gigafactory mean that the company is pouring resources into slashing battery costs like never before," Fitz-Gerald said. "This 10 million square-foot factory will have a price tag of $5 billion... hefty, you might say, for a company whose earnings were less than half that in 2013.

"But the juice is worth the squeeze. That's because the Gigafactory will be a pioneer in mass production of cost-effective and high-quality battery packs that will give Tesla an even deeper competitive edge over its competitors going forward. It's going to be the largest lithium-ion battery manufacturing plant in the world."

Editor's Note: The only drawback for TSLA stock is the $237 price tag that comes along with it. But Fitz-Gerald has found a way for investors to profit from Tesla's massive potential, at a fraction of that $237 per share cost. Here's how...

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