And as a result, I've been getting a lot of questions in the common section, asking me if I think that it is too late to invest in Tesla's stock at today's prices.

Now you guys know that I don't give buyers sell recommendations.

I've no idea who you guys are.

I'm not your financial advisor, and I have no idea what you're investing.

Strategies are any of those kinds of things, and I'm also not a fortune teller.

Anything can really happen in the stock market.

But what I do offer in my videos is my personal opinion as well as what I'm personally doing myself with my stocks.

And in this case, I happen to be a test list shareholder and a long term investor in long term believer in the stock.

So I thought it would be fun Thio in today's video to take a much closer look at the valuation, to see if it is kind of undervalued or fairly valued or possibly even overvalued at today's prices and then also take a quick look at their growth catalyst for the future to see whether Tessa's share price is justified and whether I think they can actually execute on those growth catalysts.

And then we just kind of finish up the video with my overall conclusion anally.

You know what?

I'm personally doing myself with my position in Tesla's again in relation to today's prices, to kind of answer that question that I keep getting, so I hope you guys enjoy.

This should be a fun one.

Make sure you hit the like one if you do, and let's go ahead and get started.

Hey, what's up, guys?

Welcome back to my world of stocks.

All right, let's go ahead and jump right into this and let's start by taking a look at their stock.

And it's also do a deep dive on the evaluation to see just how expensive this stock is right now.

Well, as I mentioned before, Tesla's stock has clearly been on fire in recent months as they're already up by close to 50% over just the past three months alone and since trading for well under $200 a share just a little further back then that's the stock has really taken off like a rocket, nearly doubling and share price again.

This is literally within months, not even a full year now.

I personally did by pretty heavily when it sank under 200.

But as I always tell you guys, I'm far from perfect, and I really suck at timing stocks over the short term.

So I usually just by all the way down, and the result of that is that I'm only up by around 60% at this time, despite the stock nearly doubling.

But considering that I've only owned this stock for less than a year, I'm obviously still very happy with my position now.

You could argue that even after this most recent rally, the stock has still not broken north of the record highs that we saw all the way back in 2017 as their only up by about 50% in the past five years, which don't get me wrong, it's still very solid performance.

But because short sellers really attacked the stock heavily in early 2019 the most recent rally was still not enough to reach a new record high.

And so from that standpoint, you might think, well, Tesla's should be able to make new records.

Given all the positives that we've been seeing lately, and we don't worry, we will certainly mention a few of them a little later in this video.

But the reality is that even though we're not at a record high right now, the stock is still objectively expensive from a valuation standpoint.

Now, Tesla has always struggled to be consistently profitable, so we've often looked at their price to sales ratio in an attempt to make any sense out of their valuation.

And again, only months ago, the stock was trading for a PS ratio of only about 1.5 because of how low it dropped.

And at that time I was arguing that the risk reward ratio looked extremely worth it to me, even though the media and a lot of people in the common sections of my of my videos kept calling it a falling knife, that you should run away from fast forward to today's prices, though, and we know that the PS ratio has ballooned all the way back up to about 2.4 to give you some context behind all of this, the majority of the sector trades well below a PS ratio of two and even one, while Tesla's sits all the way up here at 2.4.

And if we look at the industry comprised of over 1000 vehicles and parts companies, Tesler trades higher than 86% of them, with a P s ratio of 2.4 versus the median at only 0.5.

And we're looking at more direct competition.

Granted, it's not an easy comparison to make sense.

Tesla's the on Lee, one of these companies that is exclusively building E V E's rather than ice vehicles.

But all of these competitors actually trade insanely cheaper while also having smaller market caps as well, like Ford and GM, for example, at only a PS ratio of around 0.2 or 0.3.

By the way, a PS ratio of around one or less is generally considered a good value.

But it's obviously not the only thing that you should look at, and I only really care about the PS ratio when the company is not profitable.

But it just so happens that Tesla is expected to be profitable next year, and therefore Yahoo Finance does give them a forward P E ratio, a price to earnings ratio of around 60 which is obviously very high Now.

On one hand, it's good because it means that Tesla is expected to be profitable over the next year.

But on the other hand, it's still insanely high compared to other players like Ford and GM, who carry forward P ratios of Onley Lesson seven or six, respectively, while also paying out very high dividends, which is something that Tesla obviously cannot afford to do at this time.

In fact, GM pays out a dividend of over 4% while Ford pays out activity and yielding close to 7% which is pretty damn high.

Thus, my overall points is Tesla's stock expensive at this moment, and my answer is yes, it is pretty expensive when looking at it from a short term perspective.

However, I don't think that that paints the entire picture, especially when looking at Tesla from more of a long term view.

See many of these ice manufacturers actually really struggling to grow right now, and it doesn't look like things would change any time soon.

But Meanwhile, Tesla's completely on fire at this moment, and it looks like their growth may actually get bigger in the future if they can actually execute.

So let's take a look now at their performance versus some of these so called competitors.

And then we'll finish up the video with the growth catalyst that I think give Tesla a long term advantage, followed by my overall conclusion.

Okay, well, for starters, a little bit of context.

We're looking at the vehicle market.

It's been declining globally four years, and it's expected to continue being very weak even into the future because of the weakening global economy that continues to struggle as well as the unfortunate truth for auto manufacturers that their ice vehicles just aren't expected to sell very well in the future and eventually get B now by these electric vehicles.

This has led to companies like GM and Ford to see declining sales while Tesla continues to grow.

And by the way, I color coded these three different companies.

So Tess lies and pink GM is in yellow, and then 40 isn't like a light blue or like a baby blue.

Okay, now, over the past three years, Tesla has grown their revenues by extremely high rates, while GM and Ford have only seen a couple percentage points of growth here and there.

And even though Tesla's growth has slowed down to more realistic levels after having such explosive growth the year prior, they're still expected to keep growing at a high rates well into the future.

While both GM and Ford are seeing deteriorating sales, keep in mind that if Ford and GM want to survive, they really need to make a big push into electric vehicles, which is exactly what they're doing.

Ford is releasing an electric Mustang SUV and an electric F 1 50 truck, as was electrifying several other models over the long term.

While GM is basically doing the same thing, especially through their Chevy and Cadillac brands, don't get me wrong If I was invested in either company.

And to be honest, I have actually considered Ford many times, especially with that dividend.

But if I wasn't resident either company, I would absolutely want them to be investing heavily in electrification.

And either way, I am a fan of what they're trying to do, and I hope that they are successful in doing so.

But what you have to keep in mind is that the more that they invest in electrification, the more that they will cannibalize their ice vehicle sales, which, by the way, are insanely more profitable than their electric vehicles.

In fact, the new electric Mustang will only be profitable if you adjust for several different costs and investments.

So many argue that it's not really going to be profitable at the start, but well, actually hurt the sales of their more profitable ice vehicles, which is not exactly a good trade off.

And that's really the problem that a lot of these ice manufacturers are seeing is that they really need the growth of the V's because they're not seeing any growth in their ice vehicles.

So they need growth from movies.

But they also need the profitability of their ice vehicles because they haven't fully transition over to E.

V E's yet they're just not going to be sustainably growing their profits yet, So it's really debatable whether the trade off is worth it.

But in my opinion it is.

It is ultimately worth it because that is the future of the automotive industry.

So if they don't adapt or evolve.

They're just gonna die off.

So they do have to.

They do have to transition to Evie's, but it's gonna take some time until they can fully transition over and actually sustainably grow their profits from it.

Whereas right now the growth and the V's is probably going to hurt their profits and cannibalize some of their ice vehicle sales, which is not necessarily a good thing.

In fact, if we take a look at E.

P s growth, which is basically their expected profit growth per share, we can see that in 2019 Tesla's expected to grow ah, those profits by 53% while GM will actually declined by 27% and Ford will also declined by 5% now in 2020 both GM and Ford are actually expected to grow their E.

P s by 33% and 6% respectively.

And that's obviously a great thing.

But two problems with that number one is that they're coming off of a horrible year before where their profits tanked heavily.

So it's obviously going to be easier to grow the following year.

And number two is that even despite that growth, Tesla's actually expected to soar by close to 1000%.

Now, let's not be biased here.

There's a reason why Tesla is expected to soar in earnings growth, and that's because they've never really been profitable before.

If we look at net income for the past four years, we can see that Tesla has lost billions of dollars over the years, while the other two companies have mostly been profitable by billions of dollars in comparison.

So if your Tesla and all of this time you've been investing in your company to invent, manufacture and sell brand new products without really worrying about profitability and thus have been losing billions of dollars over the years, and now all of your investments are finally starting to pay off and you become profitable for what is essentially the first time ever for the full year, then you're obviously going to see amazing growth rates at the beginning.

But still, this isn't something that should be taken lightly.

If Tesla actually grows the way that they were expected to, it's not going to take them very long to reach similar profitability as these other ice Cos if we go back to our E.

P s growth chart for a second.

We can see that over the next five years, Tesla A is expected to grow by over 100% a year on average, while the other two companies are actually expected to see declines on average over those five years.

Okay, Now, you know, I just threw like, a ton of numbers at you.

But my point is that while I do think that Tesla is too expensive at today's evaluation, if they're successful over the longer term, the evaluation isn't really as bad as it looks.

Especially when you take the growth into consideration.

Now, if you're growing, you're e.

P s at over 100% a year and you have a P ratio of around 60.

In just a couple of years.

That P ratio goes down all the way to, like 15.

So that's where that growth can really help them out in a big way and helped evaluation.

Now, in my opinion, a lot of this is priced into the stock already, and for Tessa to actually grow at these rates that are expected from them, eyes not going to be an easy thing to do.

Not to mention that if Tesla makes some big mistakes or we happen to go into a recession and all of a sudden Tesla fails and actually becoming profitable or sustainably profitable, then the this whole kind of bull thesis really goes away, and the stock will likely get destroyed until they can kind of turn things around.

And the reason why is again because of that very high valuation, whereas the rest of the industry has very cheap valuations because not a lot is expected from them.

So the bar for them is actually set very low, and it's kind of easy for them to meet those expectations and possibly even surprised to the upside.

Whereas for Tesla's, the Boris said very high and a lot is being expected from them at this moment.

So Tesla needs to performed nearly perfectly to keep all of these short sellers from flooding back into the stock, which we know that they're just waiting for any little chance to do so.

But call me crazy.

But I actually think that Tesla will be able to meet and possibly even beat some of these very high expectations because assuming that we don't have to deal with some big macro economic issue like a recession.

I just see too many growth catalysts for Tesla to tap into in the future.

So let's just quickly run through some of those in a rapid fire before I give my final conclusion.

Okay, well, for starters, evey sales continue to see healthy growth with global TV sells climbing every month this year, according to evey volumes, again at a time when I sales continue to struggle.

And, more importantly, China alone is one of the biggest reasons to be bullish on Tesla in the future.

As through the first half of this year, China accounted for more evey sales and literally every other country in the entire world combined.

And despite accounting for so many sales already, they still managed to grow at a higher rate than everyone else, too.

This is a big deal because in Tesla's latest earnings reports, they reveal that their new Shanghai factory has already started production, and it's pumping out cars at a cost that is 65% cheaper than what it costs them to build vehicles here in the United States.

That's very important as it will continue to improve their margins despite moving away from higher price vehicles.

Likely Model X and the model s in favor of much cheaper mass market vehicles like the Model three and the model.

Why so not only will China be a huge source of revenue growth, but I think that it will also be a huge source of profit growth as well.

But going back to that chart of E V sales, we can also see that Europe is the second largest market for TV's if you kind of group it together as a region.

And there's two thoughts that I have on that number one is that the smaller Model three is perfect for Europe's narrow roads and with how environmentally conscious Europe tends to be.

There's really no reason to think that the Model three will not continue to sell very well in Europe, not to mention that even the model why is a very small version of an SUV crossover and could therefore also sell very well to any Europeans that want to own an SUV but prefer smaller size vehicles.

And number two is that Tesla has already announced the building of a new gigafactory out in Germany that should lower costs even further and allow them to build and sell their vehicles locally in the region, notably the Model three and the model.

Why?

Speaking of which, the model why is clearly another reason to be bullish on Tesla's, as actually expected to sell even better than the Model three, which, by the way, according to Clean Technica.