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Tesla Keeps Carrying the Cleantech Torch

9 August 2013 in Trading Ideas

It’s difficult to know who’s happier this year: Those betting the under on A-Rod’s season home run total – or Tesla shareholders.

The upscale electric-car maker’s shares surged again on Thursday, a day after the company surprised Wall Street by announcing that it posted a profit on revenue of $405 million. The consensus analyst estimate was for the company to lose 17 cents a share on revenue of $385 million.1

In addition, the company said it made 5,150 deliveries in the quarter, which surpassed expectations of 4,500.

cleantech everywhereAside from hitting an all-time high, Tesla’s stock has surged more than 300% in 2013. Tesla shares also represent a 15% weighting in the Cleantech Everywhere motif, which is up 77.5% this year. The S&P 500 has gained 17.1% in 2013.

During the past month, the motif has gained 2.9%; the S&P 500 has increased 3.2%.

Despite the eye-popping run this year for Tesla shares; some Wall Street analysts believe the best is yet to come. Deutsche Bank analyst Dan Galves told CNBC on Wednesday that his $160 price target, which predated the company’s earnings report, was based on the company growing to earnings per share of $14 a year and moving 200,000 vehicles annually by the end of the decade.2

Galves added that 200,000 vehicles would still represent just a small fraction of the potential market.

But it’s not just Tesla stepping up in the cleantech category. Shares of Cree, which contributes a 12.5% weighting to the motif, have doubled this year as the LED light manufacturer is exhibiting its own brand of high-end growth. As Zacks Research noted last month, the consensus analyst estimates are for the company to grow earnings by 87.5% in the current quarter and 100% in the next quarter before slowing to only 60% or more next year.3

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As for Tesla, a longer-term bearish view would likely center around more competition to come (BMW announced last week it would enter the electric-car market) as well as possible delays entering the Chinese market after the company’s own trademark was registered by a third party in that country.4

For now, however, cleantech investors would be hard-pressed to see those as immediate concerns.

1Teresa Rivas, “Tesla Soars On Surprise Q2 Profit,” barrons.com, Aug. 7, 2013.

2Bruno J. Navarro, “Tesla’s Stock Run Just Beginning: Analyst,” cnbc.com, Aug. 7, 2013, http://finance.yahoo.com/news/teslas-stock-run-just-beginning-172319803.html.

3Eric Dutram, “Bull of the Day: Cree,” July 16, 2013, http://finance.yahoo.com/news/bull-day-cree-cree-045509825.html, (accessed Aug. 7, 2013).

4Teresa Rivas, “Trademark Trolls Plaguing Tesla?,” barrons.com, Aug. 7, 2013.