Tesla Motors Inc (TSLA), Toyota Motor Corporation (ADR) (TM): Electric Car Maker Turning the Corner?

The real test

So, with Tesla Motors Inc (NASDAQ:TSLA) on the verge of turning profitable, more aggressive investors could be looking at a company with a clear ability to serve a high-end niche in the car market. That could be very profitable for a long time. This is particularly true since the company was able to turn a profit on quarterly sales of less than 5,000 cars.

So the notable share advance on the announcement of profitability could be just the start of a multi-year climb. The real test, however, will come when the company’s crossover hits the market. This mix between an SUV and a Minivan will likely be just as nice, and expensive, as the sedan, but will be more of a family car.

If Tesla Motors Inc (NASDAQ:TSLA) can maintain sales of both cars at sufficient levels to make a profit, it has a real business on its hands. Investors should watch the company’s sales numbers very closely.

A momentum play

A company going from spending to build a business to turning a profit is an important inflection point. It can mark the start of a share price advance that runs for years. While conservative investors shouldn’t climb aboard, momentum and growth investors might find there is a lot to like about Tesla’s turn toward profitability.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors . The Motley Fool owns shares of Tesla Motors .