“When EF Hutton speaks, everyone listens,” if you have been following the markets for very long, you know this marketing slogan. Well, the truth is that when Morgan Stanley speaks everyone really does listen!
This giant investment bank has tremendous influence over the stock market and when they make a statement it really means something. It is indeed rare for this venerable investment bank to make such extreme statements about a stock. Saying that a stock has a potential to gain 1000% is a heck of projection for anyone, let alone from such an influential source.
Even if Morgan Stanley misses the mark by 90%, it still means that the stock will double in value from the current trading level. A fantastic return in and of itself!
What Company Is Morgan Stanley Talking About?
Tremendous money is made by investing in products and services that are world changing and disruptive to the status quo. We saw this world changing ability with the television, internet and iPhone. The same thing is happening with silicon valleys billionaire Elon Musk’s company Tesla Motors (Nasdaq:TSLA).
The potential of this game changing company is so great it has resulted in Morgan Stanley calling it the next 10 bagger.
As you likely know, Tesla is in the process of revolutionizing the automobile industry. It’s sporty and enjoyable to drive electric cars are unlike anything on the road. Not only that, but Tesla is in the process of building out an infrastructure of fast charging stations that will enable seamless travel across the United States. The company already has the Route 95 East Coast corridor and much of California covered.
As a side note, if you have the chance to test drive a Tesla, I strongly suggest it. They are truly amazing vehicles with performance that rivals European super cars.
Why Does Morgan Stanley Have Such An Optimistic Forecast?
I don’t want to bore you with the company’s financial metrics as there are very specific and solid reasons why Morgan Stanley made the 10 bagger statement.
These reasons are Tesla’s domination in the Lithium Ion battery space and its software superiority. Let’s take a closer look.
As you likely suspect, Morgan Stanley gave a caveat to its 1000% return forecast. Adam Jonas, lead researcher of the auto sector for the investment bank, stated:
"This is a hyper-ambitious company, and the only one we cover whose stock price can realistically multiply by ten. It can also get cut in half. But we think patient investors will be rewarded if they can hang on for a wild ride."
Lithium Ion Batteries are expected to grow on a scale of 300% by 2020. As the world’s largest consumer of Lithium Ion batteries, Tesla has a goal of being the world’s largest producer of this fuel source. Here’s what Morgan Stanley says,
"Tesla’s all-electric power train makes the company one of the largest consumers of lithium ion batteries in the world, and it wants to be the world’s biggest producer of lithium ion batteries. How big? Like five times bigger than the next-biggest player. By 2029 we estimate Tesla’s 6.5 million unit global fleet will contain a stored energy capacity of 410 gigawatt hours, an amount equal to the entire daily consumption of electricity in the nation of Mexico."
With the world turning to clean energy, this potential battery making capacity by Tesla can make the company a global leader.
Next, Tesla’s focus on software is a massive advantage over the competition. The company has dedicated 60% of its employees to software development. When this is compared to the average 2% for the traditional automaker, the extreme advantage is obvious.
Not only is Tesla technologically head and shoulders above other car makers, the potential for spinoff products and even entire businesses is huge with that much brain power working on software.
This means that Tesla has a very real potential to diversify away from its core which can only help lift the bottom line.
Interest has been waning in electric cars due to the low fossil fuel prices. However, regardless of cost, the environmental friendliness and high tech nature of Tesla make it a car for now and the future. These lower prices have set up the ideal buying opportunity for bargain hunting investors!
The share price has recently bounced from double bottom lows and is pushing higher to challenge the 50 and 200 day simple moving average resistance levels. Buy now in the $199.00 to $202.00 price zone is our play on this potential ten bagger.