We recently published a list of 10 Most Buzzing Stocks To Buy Now. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other buzzing stocks.
Stock Market Volatility
September and October tend to be the most volatile months for the stock market, particularly during election years. This was recently discussed by Sam Stovall, the chief investment strategist at CFRA Research, who expects the volatility to stay until the end of October.
Stovall says that while the S&P 500 recovered all its 2022 bear market losses by January this year, and reached 22 new all-time highs by March, equities have digested some of these gains and experienced sector rotation away from 2023 high flyers into more defensive areas of the market. Hence, the year started great, but the markets are declining once again. The S&P 500’s average volatility in October 2023 was 35% higher than the average for the remaining 11 months of the year.
Investors are concerned that the Fed will be slower to lower interest rates while inflation remains sticky and GDP growth begins to cool. Stovall expects three 25-basis point cuts this year, followed by another four in 2025. He thinks that while a 50 basis point cut is rare since it only ever happened twice, in 2001 and then 2007, it is still not unlikely given that the economy is worse than expected.
According to Stovall, investors need to be prepared for this increased volatility as the market digests the Fed’s actions and the potential impact on the economy. The market will likely remain uncertain until the Fed can find the right balance between slowing down the economy and stopping inflation, without causing a recession.
Tom Lee, Fundstrat Global Advisors managing partner and head of research, is of a similar idea, suggesting that investors should remain cautious over the next 8 weeks, due to both uncertainty surrounding elections and the September cuts. He says that the stock market may experience a 7-10% pullback, considering there have already been two 7% corrections this year.
Lee thinks at least a 5% pullback can be anticipated, but if it’s only 1-2%, then that’s negligible. But despite the recommended caution for the 8 weeks starting September, he thinks the volatility does not translate into a tough full-year. He views this pullback as a buying opportunity, believing that the market has not yet reached its peak for 2024.
As Lee encourages investors to be ready to buy the dip, we are here with a list of the most buzzing stocks to buy now.
Note: All price/volume data is as of September 6.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
25 Most In Demand Cars Heading into 2024
Tesla Inc. (NASDAQ:TSLA)
Volume: 80.182 million
Average Volume (3-Month): 96.093 million
Number of Hedge Fund Holders: 85
Tesla Inc. (NASDAQ:TSLA) is the world’s largest pure-play EV manufacturer, with significant contributions to the renewable energy sector. In 2023, 100% of its revenue was generated from sustainable products and services, all while delivering 1.81 million electric vehicles.
Its innovation extends beyond vehicles, as evidenced by its Gigafactory, a key manufacturing site for EV components such as lithium-ion batteries. The company’s Energy Generation and Storage segment includes products like the Powerwall, Powerpack, and Megapack, which are battery solutions that cater to residential, commercial, and utility-scale applications, allowing users to store renewable energy for future use.
Global EV sales are slowing down due to high battery replacement costs, higher interest rates, and growing competition but the company managed to produce over 410,000 units and deliver 444,000 units in Q2. It aims to scale its production to 3 million vehicles by 2025.
In this period, it reported revenue of $25.50 billion, a 2.3% increase from the previous year. Automotive revenue saw a rise of 14% compared to the first quarter. Energy storage revenue doubled to reach $3 billion.
Tesla Inc.’s (NASDAQ:TSLA) diversification into the robotaxi business presents a compelling investment opportunity. The unveiling event will be on October 10. Cathie Wood, a longtime investor, believes that this business could make up 86% of its earnings by 2029.
85 hedge funds held stakes in the company in the second quarter. Valued at $8,252,723,916, Citadel Investment Group is the largest shareholder of the company.
As the world shifts towards sustainable energy and electric vehicles, Tesla Inc.’s (NASDAQ:TSLA) focus on innovation and technology positions it well to capitalize on these trends. Elon Musk’s vision is also essential for its success.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
Overall TSLA ranks 6th on our list the most buzzing stocks to buy. While we acknowledge the growth potential of TSLA as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
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