Top Stock Pick Today

Home > Industry Analysis > Content

【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 is not solely reliant on car sales, as it also earns from its charging network, self-driving software, and battery storage products. Tesla's future growth potential is further bolstered by its foray into robotics. Analyst sentiment on the stock is mixed, but long-term investors are advised to consider any dips in price as buying opportunities.

FutureCar Staff Sep 13, 2023 6:22 AM PT

Investing in a single company goes against one fundamental principle of investing — diversification. However, not everyone can afford to diversify or they may want to outperform the S&P 500 with a single stock.

If I were to choose a single stock, it would undoubtedly be Tesla. This year alone, it has outperformed the S&P 500 with a 153% return to investors, and I believe it still has room to grow.

Tesla (NASDAQ: TSLA) is the largest electric vehicle (EV) producer in the world, holding a global market share of 22% from around 4.5 million EVs sold since its inception.

In 2022, electric vehicles accounted for three out of every 20 cars sold, with half of them sold in China. According to projections from the International Energy Agency (IEA), around 14 million EVs will be sold by the end of this year, which is a 35% increase from the previous year. This number includes plug-in hybrids.

To boost sales in the largest EV market, Tesla recently reduced the prices of its Model S and Model X cars in China, both for its standard versions built in China and its premium versions built abroad.

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

With its AI machine learning capabilities and its lead in FSD technology, Tesla can apply its knowledge to other fields, such as robotics. The Tesla Bot, known as Optimus, is a humanoid robot designed to address the labor crisis, which is one of the company's priorities according to Elon Musk's product roadmap in 2021.

Musk estimates that the demand for Optimus could reach as high as 10 to 20 billion units, which would make up the majority of Tesla's long-term value.

The sentiment among analysts is mixed. According to TipRanks, there have been 28 ratings in the past 3 months, with a majority of 'hold' ratings at 12 compared to 11 'buy' ratings. The combined average price target for the next 12 months is $270, slightly below the current market price of $273.

However, there are some bullish analysts as well. Adam Jonas from Morgan Stanley upgraded the stock on September 11, setting a price target of $400, the most optimistic target in recent months. On September 12, Tom Narayan from RBC Capital reiterated his 'buy' rating with a 12-month price target of $400.

Personally, I see Tesla as a long-term investment beyond 12 months. Any dips in the stock price, especially to $200 or $100, would be excellent buying opportunities for me.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative, and your capital is at risk.