Driving a Tesla Home? Don't Miss the Opportunity
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
After borrowing money from the government (or banks) in 2008-2009, am I really telling you that there is a car company worth buying right now? Yes, and while Ford (NYSE: F) still owes bank loans, there is a car company out there that is dreaming about the future. It only took in $127 million in revenue those two years, but now it appears to be the best buy around.
Is it serious?
Since Ford's loan in 2009, Tesla (NASDAQ: TSLA) has seen revenues increase by 369%, including an increase of 202% last year. That growth can't continue, can it? Not forever, no. However, with 2012's revenues sitting at $413 million, and the past 12 months of revenues at $945 million, it doesn't appear this growth will stop anytime soon.
Obviously, more and more people are buying Tesla vehicles every day, but here is the kicker. The company hasn't come out with a cheap version of its vehicles yet! The Model S starts at $62,400 and goes up to nearly $90,000. No one can afford a car that averages just over $70,000, right? Wrong. People are paying for these cars.
Tesla's Model S had more sales in the first quarter than any of these other luxury vehicles in its price range. If this doesn't convince you, consider the three stages that Elon Musk, Tesla's CEO, has talked about for a while now. His plan is to basically divide Tesla's growth into three stages. 1) Sell expensive, luxury cars, knowing not many will sell. 2) Sell cheaper luxury cars knowing that more people will buy them. 3) Sell affordable cars that virtually everyone can afford, and sell a lot of them.
Currently, Tesla has barely entered the second stage. Imagine its growth potential over the next several years as it moves through stage 2 and into stage 3. This should be fun.
Performance of gas vs electric
No, I'm not talking about the Model S Performance, which will go from 0-60 in 4.2 seconds, I am talking about the companies stocks. Tesla, Ford, and General Motors (NYSE: GM) are all American based companies with far different performance. One of the biggest differences is how they are powered. Most of In all reality, shareholders should be happy with any of the performances of these companies in the past year. Just because Tesla's stock has more than tripled that of GM's doesn't mean GM and Ford are having a bad run. They aren't.
So, it is obvious these three companies are experiencing impressive growth, but are they valued well? Should it be?
Tesla is a very young company, and I wouldn't want it to have tons of cash. At this stage of growth, investors should want money being poured into Capital Expenditures (Cap Ex) and other ways that will benefit them long term. This is something Tesla has certainly done, even more than most young companies. How much? How about a 2,017% increase since 2009? Typical metrics of valuation are not fair to use on a company spending this much money on long term answers.
Ford's FCF yield is 2.1% while GM's is -0.7% (due to a negative FCF). Meanwhile, GM has a earnings yield of 11.7%, while Ford's is 9.4%. Both of those figures are respectable, and it both show solid P/E's. GM and Ford show P/E's of 8.5 and 10.7. So, here's the deal. What do you want? Do you want a company that is putting money where it should, or a company with reasonable metrics (but also some questionable ones)?
The Foolish bottom line
I only wish I had added Tesla as a CAPS pick earlier, but I did in the past couple days. I don't see how it can go wrong, as long as it continues to transform the industry as it is currently. It is growing phenomenally fast and doing what every young company should do. I believe it has a very bright future ahead. Let's see if my vision for Tesla comes true.
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Tyler Wofford has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Tesla Motors . The Motley Fool owns shares of Ford and Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!