My first car was a Ford Mustang GT. I didn't even know how to drive stick when I bought it. I instantly fell in love. Until I had to drive it everyday back and forth to work. Then I felt the pain at the pump. As a result, I started driving a Chevy Cavalier to keep the dollars in my wallet. 30mpg vs 17mpg.
Best of Both Worlds
I gave up looking cool and driving fast for eventually showing up and having good fuel economy. Well now there’s a way to look cool, drive fast and have good fuel economy. Automaker Tesla (TSLA - Analyst Report) put it all together by bringing a well-made electric luxury car with curb appeal to the market. CEO Elon Musk, the real-life Tony Stark, took on the risk that the “Big Three” Detroit automakers were afraid to. As a result TSLA has been a dream stock for shareholders while the rest of the sector has struggled.
My favorite part about stocks like TSLA is how they go up enough to make people shake their heads in disbelief. They scream about the valuations, wonder where the growth is going to come from, and worry about every sneeze that comes out of China. What matters to me is that right now TSLA is a Zacks #1 Rank stock and the chart looks bullish. Three analysts have revised their current year and next year’s earnings estimates to the upside. When TSLA reports on February 19th it could mark the first quarter that TSLA is in the green. If TSLA stock has been going nuts without earnings, what will happen when they actually make money? I think the stock will run further. The price and consensus chart below shows the impact earnings have had on the stock price.
From a technical perspective, TSLA’s chart is setting up for a breakout of the all-time high at $194. The pullback to $116 was healthy and helped to shake out a lot of the weaker hands. Off the bottom the stock crossed over the 25x5 SMA giving an initial bullish stance. This was confirmed on January 14th when TSLA shares rallied back above the 25x5 and saw a Stochastic buy signal. A good earnings report could be exactly what this stock needs to retest the all-time high.
As for the makers of my beloved Mustang and sturdy Cavalier the picture is a whole lot uglier. Downward revisions and earnings misses have given Ford (F - Analyst Report) and General Motors (GM - Analyst Report) Zacks Ranks of #4 and #5 respectively. I was a big believer in Ford until the door got slammed in my face three times at $18. Now with our fearless leader Alan Mulally on the way out, a totally revamped Mustang isn’t enough to get Ford out of the doldrums. For what it’s worth, I do believe that after we see Mustang sales in Europe with the 4-cylinder turbo late 2014 that the picture will look a whole lot better for Ford.
A week ago analysts saw GM earnings at $1.03 for next quarter. Now we’re looking at $0.78 consensus. The chart looked great until January hit, now the bottom is dropping out. I would not be surprised if the stock came down to $30 in the near term. If they can find a way to lower the price on the Volt maybe they’ll have a chance to get more people into the entry-level electric car market. They are getting closer though and with incentives the $34,000 price tag may be low enough to snag some market share.
You know, I’m beginning to miss that old Chevy Cavalier of mine.