Keep Buying This Magnificent 7 Stock
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If you think about it broadly and somewhat conceptually, you can pull three key themes to better understand investing in the rear view mirror and connect it to the future.
Today, we use Tesla (TLSA) to illustrate, primarily on the first two points. We’ll include a link to The Juice archives in today’s Freshly Squeezed section so you can see. But we’re placing considerable focus on alternative investing. And we’ll continue to do so into 2025. While alternative investments (and the other big area going forward — AI) don’t directly connect to the first two points or to Tesla (save its involvement in AI), there is a more conceptual and super important connection. The idea that calling the top repeatedly or not investing in a story stock because it isn’t profitable is akin to characterizing AI or alts as fads or too risky. If you take that old school approach, The Juice thinks you’ll end up wrong. You’re going to leave money on the table. With that in mind, we’ll get back to alts later in the week. But – holy crap – Tesla. |
Continued…
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In mid-September, The Juice wrote: As for Tesla, we look at it more like Nvidia. Both companies are at the forefront of what are — for all intents and purposes — huge, early inning consumer technology/lifestyle/everyday life trends. Of course, for Nvidia, it’s artificial intelligence. And, for Tesla, it’s electric vehicles (EVs)… First, TSLA is the ultimate buy the dip stock. It’s one of those names we think it makes sense to regularly buy, but in small increments. Keep some cash behind double down on dips. Because — yeah, TSLA stock is down about 16.5% over the last year, but the dips. Consider April 19, 2024 when TSLA dropped to roughly $147 or August 7, 2024 when it bottomed after sustained downside at around $192. Now, TSLA trades for — give or take — $230 per share and actually up approximately 42% over the last six months. The Juice doesn’t typically advocate timing the market or individual stocks, but if you have watched TSLA long enough you know it’s one of the best examples of establishing one hell of a nice cost basis if you buy when or as it’s tanking. So, to update that post.
Over the last year, TSLA is now up roughly 33%. Why? Because it rebounded off of another one of those aforementioned dips we strongly suggested you buy — actually, double down — on. When we wrote that September article, TSLA was trading for $227. It was starting to move back up after crashing from its June high of ~$263. Since we wrote that, TSLA is up roughly 15%. Again, Tesla is a classic buy-the-dip stock. But also a story stock. Ignore the noise, buy TSLA regularly and buy more when investors overreact and send the stock down. If you don’t, that’s fine. There are other (really good) stocks and other (alternative) investments to buy. But Tesla is nothing else, if not somewhat predictable. Yes, predictable. Say what you will about Elon Musk. We’ll just say we long for the days when the guy wasn’t such a dichotomous, if not divisive enigma. But, however you feel, there’s no denying that his company — Tesla — is at the center of a huge story. It is the stock that leads the electric vehicle space. In many ways, it created the space. A space that can help drive America’s economy going forward. It could even, in many ways, transform society. Just as Amazon.com (AMZN) effectively created and subsequently led e-commerce, Tesla does likewise with EVs. (And, don’t forget, the company’s forays into energy and autonomous vehicles). The Amazon critics (remember the people who chided the company for not being profitable) were as misguided as the people who panic sell Tesla or fail to separate the very real story at the company from Musk’s sideshow antics. We haven’t seen a top. And it’s okay to buy a story. Story stocks deserve some room for missing earnings or having some other quantitative misstep. If other investors get spooked by those blips on the radar screen, consider it your signal to buy more. The Bottom Line: The money people have made on the Magnificent 7 stocks alone — in the face of people calling the top for years — should serve as symbolic. Investors are always looking for the next big thing. The Juice thinks we have a few of them. The Magnificent 7 and their peers have been (big) things for a while now. We don’t see this changing. We love the stories around these stocks, not to mention other story stocks such as DoorDash (DASH) and Uber (UBER). Through AI (which many of the companies in the above group also are leaders in) and alternative investing into the mix and we’re truly in the golden age, no matter what Elon Musk says on X or what happens on election day. |
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