Tesla Motors (NASDAQ:TSLA) has been one of the best performing stocks returning approximately 70% YTD. The stock, which has been gaining ground for the past several quarters, made a new lifetime high of $267.26 on 18th August 2014 after the company announced its plans to extend the warranty on its Model S sedan to eight years and unlimited miles. The CEO of the company, Elon Musk announced that the impact of the extended warranty on the company’s earnings would be “moderately negative” in the short-term.
Though the stock witnessed some profit booking at higher levels and ended the day 0.79% down, it still remains a high conviction buy.
The company has been posting robust annual growth and expects even better times going ahead. The electric vehicle maker sold roughly 22500 in 2013 and is confident of delivering 35000 units and 100000 units in 2014 and in 2015 respectively.
A quick look at the daily charts reveals a strong uptrend with no signs of a breather or a fatigue in this rally. Long-term investors can buy the stock at present valuations and on every dip till the level of 220 is respected on a closing basis. Short-term traders must wait for a correction as the stock currently looks overbought in the immediate term and a small correction cannot be ruled out. The RSI reading at 71.46 confirms the same. Traders can go long in this stock at around 235 for a target of 260 by placing a stop-loss just south of 225.
With the demand for electric vehicles growing and with the industry gaining more ground everyday, it sure looks like Tesla Motors could easily be a great bagger in the long run. The company’s ambitious growth plans have impressed the investors and one must NOT sit out of this rally.
By: Nikhil Gupta, Financial markets Researcher/Analyst