Top Stock Pick

author: FutureCar Staff    

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 has more 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, three out of every 20 cars sold were electric, and half of them were sold in China. The International Energy Agency (IEA) projects that by the end of this year, 14 million EVs will be sold, a 35% increase from the previous year. This 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, full self-driving (FSD) software, which costs $12,000 per car, and battery storage products, which grew 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 another field: 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, based on 28 ratings in the past 3 months, analysts have a 'hold' rating. The 'hold' camp slightly outweighs the 'buy' camp at 12 to 11. 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 bullish analysts as well. Adam Jonas, a Morgan Stanley analyst, upgraded the stock on September 11 with a price target of $400, the most optimistic price target in recent months. On September 12, Tom Narayan from RBC Capital reiterated his 'buy' rating for the stock with a 12-month price target of $400.

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

Remember, this information should not be considered investment advice. Investing is speculative, and there is always a risk to your capital.

FutureCar Staff