Is Tesla Stock a Good Stock to Purchase? Discover Here

Tesla is a notable company that continues to skyrocket in value. In fact, it reached a new record high of $961 per share on Tuesday June 23.

In 2019, its vehicle deliveries soared to about 368,000 by 50 percent year on year. This fast-growing annual vehicle delivery translates into rising gross profit and improved cash flow.

As a result of its success, Tesla is a fantastic choice for someone looking to invest their money in stock. Take a look at the below guide for more information.


Is Tesla Stock a Good Stock to Purchase? Discover Here
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A High Composite Rating

The IBD Stock Checkup Tool reveals that, of a best-possible 99, Tesla has an IBD Composite Score of 97. This ranking means that Tesla stock actually meets 97 percent of all shares in terms of the most relevant fundamental and technical requirements for stock selection.

Currently, the stock has a relative strength of 99. The rating follows the leadership of the market. It demonstrates how the price action of a stock compares against that of other stocks during the last 52 weeks.

The corresponding strength line measures the performance of a share versus the index of the S&P 500.

Tesla Stock Bounces Magnificently

In the first half of 2019, Tesla struggled amid concerns about market demand.

In the second half of the year, the stock quickly bounced back with all-time high share prices. It also reported profits in both the third and fourth quarters.

Tesla became the first U.S. automaker to hit a $100-billion market cap earlier this year. This has now risen to $140.5 billion, nearly twice the combined size of the competing General Motors ($48 billion) and Ford ($36 billion).

At this moment, only Toyota boasts a higher market cap.

Predictions Lean on Tesla’s Impressive Outlook

Tesla started building impressive manufacturing plants in China. Many of the bottlenecks that hampered their Model 3 launch have been fixed, resulting in a 50 percent rise in their car production during the year. 

Investor concerns about the company’s cash flows appear to have eased after a mid-year capital increase.

Tesla Will Eventually Recover

Tesla has recently resumed operations at her Fremont, Calif, auto-production factory. The plant was forced to close due to the coronavirus pandemic some nine weeks ago.

As a result of the plant closure, it withdrew second-quarter and full-year guidance. The company posted an adjusted profit of $1.24 on $5.98 billion in sales. Wall Street had anticipated a $6.16 billion revenue loss of 26 cents.

Tesla planned to sell more than 500,000 vehicles at the start of the year this year. Analysts have since changed their own forecasts to about 420,000 consensuses.

Tesla Stock is Still Popular

Other investors are not afraid and Tesla’s rapid rise is starting to catch up to where they think it should be.

ARK Invest has a five-year price target of $7,000 a share on Tesla. A call defending firm founder Cathie Wood focused on Tesla’s commanding market share of electric vehicles.

“Tesla hasn’t lost market share in the EV market, and conventional cars have had an adamant time producing a dollar-performance or efficiency-based car that is on par with Tesla,” ARK analyst Tasha Keeney told CNBC on Tuesday.

Is Tesla Stock a Good Stock to Purchase? Discover Here
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Given the meteoric rise in Tesla, which saw shares more than double this year, some investors argue that the company’s economics and potential growth justify its current valuation and stock price.

The fundamental argument is that Tesla and her founder Elon Musk are at the forefront of a drive to a greener future. The role of the company as an early adopter gives it a strategic edge on the market. 

Tesla is not only a pioneer in electric cars, but it will also fuel further progress with its increasing battery, solar, and autonomous driving divisions.