Is Tesla Motors a Good Portfolio Play?

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With shares of Tesla Motors (NASDAQ:TSLA) trading around $140, is TSLA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components, and sells electric powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores as well as over the Internet. Consumers and companies are looking to save at the pump, and what better way to do so than with electric vehicles?

With Tesla shares sliding in early Thursday trading, the news of a garage fire in California is overcoming the recent announcement that Tesla will be adding capacity at its Fremont, California, factory to produce 35,000 more vehicles per year — not to 35,000, but 35,000 more vehicles. The state of California is negotiating tax breaks for Tesla that will allow the company to save about $37.4 million toward the purchase of $415 million worth of equipment to facilitate the expansion, as the state is confident that the investments will provide an economic boon down the road that will be greatly more beneficial for California than the tax money collected up front. Tesla is slated to roll 21,500 units of its Model S sedan off the line this year, so the added capacity would allow the company to more than double its current production rate. Moreover, it will help alleviate concerns and fears that the company’s current output will hinder its future opportunities for meaningful growth.

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