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【Summary】Tesla is recommended as the top stock to buy due to its strong performance and dominance in the electric vehicle market. The company's revenue comes not only from vehicle sales but also from its charging network, self-driving software, and battery storage products. Tesla's potential expansion into robotics adds to its long-term value. Analyst sentiment is mixed, but some have bullish price targets. The article suggests that any dip in Tesla's stock price would be a good buying opportunity.

FutureCar Staff Sep 12, 2023 4:16 PM PT

When it comes to investing, diversification is a fundamental principle that many follow. However, not everyone has the means to diversify their investments or may have a desire to outperform the S&P 500 with a single stock.

If I had to choose just one stock, it would undoubtedly be Tesla. This year alone, Tesla has outperformed the S&P 500 with an impressive 153% return to investors, and I believe there is still more growth to come.

Tesla is the largest producer of electric vehicles (EVs) in the world, with a global market share of 22%. Since its inception, Tesla has sold around 4.5 million EVs. In 2022, electric cars accounted for three out of every 20 cars sold, with half of them being sold in China. The International Energy Agency (IEA) projects that by the end of this year, approximately 14 million EVs will be sold, representing a 35% increase from the previous year, including plug-in hybrids.

To further boost sales in the Chinese market, Tesla recently reduced the prices of its Model S and Model X cars, both for the versions manufactured in China and those built abroad.

Aside from its electric vehicles, Tesla generates revenue from other sources. This includes its supercharging network, its full self-driving (FSD) software, which costs $12,000 per car, and its battery storage products, which saw a significant 220% year-over-year growth in Q2.

With its advanced AI machine learning capabilities and its lead in FSD technology, Tesla has the potential to expand into other industries. One notable example is the Tesla Bot, also known as Optimus, a humanoid robot designed to address labor shortages. Elon Musk has highlighted this as one of the company's priorities and estimates that demand for Optimus could reach 10 to 20 billion units, representing a significant portion of Tesla's long-term value.

Analysts' sentiment regarding Tesla's stock is mixed. According to TipRanks, there have been 28 ratings in the past 3 months, resulting in a 'hold' rating. Among these ratings, 12 analysts recommend holding the stock, while 11 recommend buying it. The combined average price target for the next 12 months is $270, which is 1% below the current market price of $273.

However, there are some analysts who are more optimistic. Adam Jonas, an analyst from Morgan Stanley, recently upgraded the stock and set a price target of $400, the highest among analysts in recent months. Tom Narayan from RBC Capital also reiterated his 'buy' rating for the stock, with a 12-month price target of $400.

Personally, I see Tesla as a long-term investment opportunity, beyond the next 12 months. If the stock were to experience a dip, especially to $200 or $100, I would consider it an excellent buying opportunity.

Disclaimer: The content provided here should not be considered investment advice. Investing always carries risks, and your capital is at risk when investing.