The Smartest (and Most Profitable) Way to Play the Recent Tesla Snub

After a historic rally of 1,000% over the past year, Tesla Inc. (NASDAQ: TSLA) has hit a bump in the road.

You see, S&P Dow Jones Indices rebalances its indexes every quarter. A company needs to meet specific qualifications to be considered, including four consecutive quarters of profitability. So, investors eagerly await to see what stocks get added and removed when this time rolls around.

And many expected Tesla to be listed on the list of new stocks being added to the S&P 500 - so imagine the panic when Tesla didn't make the cut.

The decision not to add the stock to the S&P 500 surprised the entire market, especially those waiting for weeks on this decision, excited after Tesla reported a second-quarter profit in July. Tesla had ticked off many of the requirements needed to be considered for this index.

Tesla is now among the top 15 largest companies in the United States when measured by market capitalization - sitting at $320 billion. This makes the electric car marker the size of long-standing giants like Nvidia Corp. (NASDAQ: NVDA). And at one point, Tesla grew to be the seventh-largest company in the United States.

But size isn't all that matters when it comes to the S&P 500.

Unlike other benchmarks, the S&P 500 isn't driven by a strict set of rules or qualifications. Instead, the benchmark relies on a committee to decide what gets added and removed. Ultimately, Tesla didn't satisfy the S&P 500 committee.

And this snub didn't bode well for the electric car maker's stock. Tesla shares were down 19% in early trading Tuesday, wiping out more than $70 billion in market value.

Before you jump at this new price tag, there's something I want you to know. There's a way you can play this TSLA snub scenario for the most profits...

Where's the Money?

Tesla has certainly had an impressive year, so the snub by the S&P 500 came as quite a surprise.

Investors seem to be taking profits on the stock after an incredible 1,000% rally over the last year. Even after the stock's sell-off over the last week, shares are still up over 690%.

While I know this growth potential and lower price tag might be enticing to buy in, I'm here to tell you that I don't believe this downward spiral is over.

Not even close.

In fact, I believe that the automaker could sell off to the $230 level. And if the market is weak (like we've seen over the last few days), investors will be looking to sell the stock more.

And that's precisely why I'm currently not looking to add TSLA to my lineup.

Instead, I am turning to a company presenting definite growth plans with strategic partnerships and concepts... a company that's been making some great business decisions lately and is painting a bright future for itself.

The company: General Motors Co. (NYSE: GM).

A Better Buy Than Tesla

One reason I really like General Motors right now is that it has officially teamed up with another electric carmaker, Nikola Corp. (NASDAQ: NKLA), to work on the Nikola Badger, a fully electric and hydrogen fuel cell electric pickup truck.

The partnership gives General Motors an 11% stake in the startup, receiving $2 billion in equity and the right to nominate one director to Nikola's board.

General Motors already has electric pickups and SUVS nearing production, so the Badger truck will share most of its engineering with those vehicles. Nikola is hoping to have the Badger on the market by 2022.

This is indeed a strategic partnership for both companies, guaranteeing that General Motors will remain ahead of the curve for electric car technology, and garnering Nikola massive media attention. Bottom line, it's a win for all involved.

So I'm giving you the green light to buy GM right now. I'll be keeping a close eye on Nikola's development. As soon as a profit opportunity develops, you'll be the first to know.

My research into GM and Nikola is just the latest example of how some of the biggest profit potential continues to fly under the radar.

By applying the algorithms used in my S.C.A.N. trading system, I'm able to cut the best plays from the herd and tell my Project 303 readers exactly when to strike...

Today's your chance to get on board before I announce our next pick.

Click here now...

Follow Money Morning onFacebook and Twitter.