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Zacks Rank #1 (Strong Buy) stock Tesla ((TSLA - Free Report) ) is the world’s leading electric vehicle (EV) and has evolved into a dynamic technology innovator (full disclosure: we are long the stock in the Technology Innovators portfolio since April).
Though Tesla is much younger than competitors like Toyota Motors ((TM - Free Report) ),Ford Motor ((F - Free Report) ), and General Motors ((GM - Free Report) ), the company has managed to capture roughly half of the U.S. EV market. Unlike legacy automakers, Tesla is laser-focused on its EV segment and relies on little-to-no marketing to sell its vehicles. Tesla’s automotive business remains its most extensive, though it has steadily expanded its high margin energy generation/storage business.
Tesla’s Intermediate Growth is Back on Track
Although Tesla’s earnings growth has stagnated recently, Zacks Consensus Estimates suggest that Tesla’s annual earnings will jump by a healthy 29.65% in 2025.
Image Source: Zacks Investment Research
3 Bullish Catalysts for Tesla Stock
Below are three bullish fundamental catalysts that will drive earnings growth in the short term:
1. Cybertruck Sales: Tesla CEO Elon Musk revealed that the Cybertruck became the third best-selling EV in the United States in the third quarter (only behind the Tesla Model Y & Model 3). As Tesla becomes more efficient at producing Cybertrucks, deliveries should soar.
2. Lower Interest Rates: A more “Dovish” Federal Reserve benefits Tesla because it allows consumers to more affordably finance cars.
3. China Stimulus: China’s floundering economy has adversely impacted Tesla’s Chinese sales. However, Chinese officials recently announced a sweeping economic stimulus package that should indirectly benefit Tesla in the region.
Long-Term TSLA Stock Catalysts: Energy Storage & Robotaxi
Energy Generation & Storage Business
Tesla’s revenue from this business has exploded, growing at a triple-digit compound annual growth rate (CAGR) over the past three years. Though it remains a small segment of Tesla’s business, its robust growth and juicy margins should be a significant catalyst in the long term.
Robotaxi
Many investors falsely believe that Alphabet’s ((GOOGL - Free Report) ) Waymo cyber taxi service has a leg up on Tesla’s because it has been greenlighted in some major U.S. cities like San Fransisco and is in service, while Tesla still hasn’t gone live. Nonetheless, being the first to market is not enough to win the battle. Tesla has a massive edge when it comes to training their Full Self Driving model. As a result, Tesla expects that FSD will be safer than a human driver (< 1 accident reported every 550k miles traveled).
Furthermore, Tesla is far more scalable than Waymo because it doesn’t rely on super expensive lidar sensors like Waymo. Though I see both companies ultimately succeeding, skeptics are very wrong to assume that Waymo will run away with cybertaxi supremacy just because they launched first.
Is Tesla a “GARP” Play?
Beyond its attractive growth prospects, Tesla boasts a very inexpensive valuation, historically speaking, making it an attractive “growth at a reasonable price” or GARP play. TSLA’s price-to-sales ratio is at its lowest level since 2020, right before TSLA shares vaulted more than 20x.
Image Source: Zacks Investment Research
Long Term TSLA Stock Breakout
Earlier this year, TSLA shares signaled a trend shift when they cleared a long-term downtrend line on the quarterly chart.
Image Source: TradingView
Bottom Line
Several bullish catalysts suggest the worst is over for the leading EV maker. Tesla is expected to resume its hyper-growth phase while its valuation remains historically cheap.
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Bull of the Day: Tesla (TSLA)
Tesla Stock Overview
Zacks Rank #1 (Strong Buy) stock Tesla ((TSLA - Free Report) ) is the world’s leading electric vehicle (EV) and has evolved into a dynamic technology innovator (full disclosure: we are long the stock in the Technology Innovators portfolio since April).
Though Tesla is much younger than competitors like Toyota Motors ((TM - Free Report) ), Ford Motor ((F - Free Report) ), and General Motors ((GM - Free Report) ), the company has managed to capture roughly half of the U.S. EV market. Unlike legacy automakers, Tesla is laser-focused on its EV segment and relies on little-to-no marketing to sell its vehicles. Tesla’s automotive business remains its most extensive, though it has steadily expanded its high margin energy generation/storage business.
Tesla’s Intermediate Growth is Back on Track
Although Tesla’s earnings growth has stagnated recently, Zacks Consensus Estimates suggest that Tesla’s annual earnings will jump by a healthy 29.65% in 2025.
Image Source: Zacks Investment Research
3 Bullish Catalysts for Tesla Stock
Below are three bullish fundamental catalysts that will drive earnings growth in the short term:
1. Cybertruck Sales: Tesla CEO Elon Musk revealed that the Cybertruck became the third best-selling EV in the United States in the third quarter (only behind the Tesla Model Y & Model 3). As Tesla becomes more efficient at producing Cybertrucks, deliveries should soar.
2. Lower Interest Rates: A more “Dovish” Federal Reserve benefits Tesla because it allows consumers to more affordably finance cars.
3. China Stimulus: China’s floundering economy has adversely impacted Tesla’s Chinese sales. However, Chinese officials recently announced a sweeping economic stimulus package that should indirectly benefit Tesla in the region.
Long-Term TSLA Stock Catalysts: Energy Storage & Robotaxi
Energy Generation & Storage Business
Tesla’s revenue from this business has exploded, growing at a triple-digit compound annual growth rate (CAGR) over the past three years. Though it remains a small segment of Tesla’s business, its robust growth and juicy margins should be a significant catalyst in the long term.
Robotaxi
Many investors falsely believe that Alphabet’s ((GOOGL - Free Report) ) Waymo cyber taxi service has a leg up on Tesla’s because it has been greenlighted in some major U.S. cities like San Fransisco and is in service, while Tesla still hasn’t gone live. Nonetheless, being the first to market is not enough to win the battle. Tesla has a massive edge when it comes to training their Full Self Driving model. As a result, Tesla expects that FSD will be safer than a human driver (< 1 accident reported every 550k miles traveled).
Furthermore, Tesla is far more scalable than Waymo because it doesn’t rely on super expensive lidar sensors like Waymo. Though I see both companies ultimately succeeding, skeptics are very wrong to assume that Waymo will run away with cybertaxi supremacy just because they launched first.
Is Tesla a “GARP” Play?
Beyond its attractive growth prospects, Tesla boasts a very inexpensive valuation, historically speaking, making it an attractive “growth at a reasonable price” or GARP play. TSLA’s price-to-sales ratio is at its lowest level since 2020, right before TSLA shares vaulted more than 20x.
Image Source: Zacks Investment Research
Long Term TSLA Stock Breakout
Earlier this year, TSLA shares signaled a trend shift when they cleared a long-term downtrend line on the quarterly chart.
Image Source: TradingView
Bottom Line
Several bullish catalysts suggest the worst is over for the leading EV maker. Tesla is expected to resume its hyper-growth phase while its valuation remains historically cheap.