3 reasons why Tesla's actions can be a long -term bargain

It has been a simply wild week for Tesla (Nasdaq: TSLA) In the stock market, with price changes that would be unusual for a much smaller company and much less one with its market capitalization. For a long time I wanted to buy some Tesla shares for my portfolio if I could do it at a price that I felt was attractive, so I have been waiting for that moment.

For now, however, I have not made a movement.

I still think that Tesla is poorly overvalued. As an investor, however, I try to see both sides of a situation. After all, a market is composed of buyers and vendors at the same time.

As part of that, here are three reasons that could suggest that Tesla's actions can be a long -term bargain, and why I do not find them persuasive at the current price level.

1. potentially huge final markets

The basic way of thinking about the possible future sales of a company is to consider how large its objective markets and what kind of participation of these markets are.

Tesla is already huge when it comes to sales. Last year, $ 98 billion reported in revenues.

The potential of the final market is huge. Lady cars create a great market, but Tesla has the ambition to extend to other types of vehicles, from trucks to what are basically minibuses.

You also want to spread to offer automated taxis. The taxi provision is another great market.

In addition to that, Tesla has a rapid growth business in energy generation. That market is vast and also resistant.

As if that were not enough, Tesla plans to compete in robotics.

2. Tesla has many competitive advantages

Recently, many investors have focused on some of the risks facing Tesla.

The high political profile of its executive director could discourage some clients. Fiscal credits in key markets could come to an end. The electric vehicle market has become much more competitive, which takes pressure on profit margins throughout the industry.

These risks are real in my opinion and significant.

But the risk is part of the business and Tesla has long demonstrated that it can navigate in challenging commercial environments.

In addition to the risks, it benefits from a variety of competitive advantages that could help you increase market share in those large final markets that I mentioned earlier, something that you have been doing in the generation of energy recently.

Its high profile helps to raise awareness of the brand at low cost. It has a deep experience in automotive software, energy storage, integrated manufacturing vertically and a large number of other areas. If you can turn your competitive advantages into profits, that could be good news for Tesla.

3. Proven profit growth capacity

For now, the price of Tesla shares stop buying me. The price / profits of 124 is too high for my tastes.

The risks that I mentioned above could mean that Tesla's profits fall abruptly, as they did last year.

But what if they go on the other side? Not necessarily soon but, say, five or 10 years?

Tesla went from being a large loss company for years that obtained an annual gain in the billions of dollars. If you can increase your long -term profits, the price of today's shares could be a bargain.