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If you had invested $1,000 in Tesla shares at the start of 2015, your investment would have grown to a value of $27,615 a decade later. This translates to an average annual gain of approximately 39%, significantly outperforming the S&P 500’s average annual gain of 12%. (It’s worth noting that the S&P 500’s gain is calculated without factoring in reinvested dividends, which would push the return to 13%.) Historically, the S&P 500 has delivered annual gains close to 10% over numerous decades, making this past decade an exceptionally strong one, turning a $1,000 investment into nearly $3,400 with dividends reinvested.
Tesla has exhibited remarkable growth, with a recent valuation of $1.3 trillion, placing it among the elite “Magnificent Seven” stocks alongside Apple, Amazon.com, Alphabet (Google’s parent company), Meta Platforms (Facebook’s parent company), Microsoft, and Nvidia.
However, Tesla’s stock has been characterized by significant volatility. While the shares surged by over 50% in the past year, the average growth over the last three years was a modest 2.49%. Looking back over the last five years, the average growth rate was an impressive 67.6%. The future performance of Tesla remains uncertain, posing questions about its trajectory in 2025 and where its stock might stand five years from now. Investors considering Tesla today should carefully evaluate these factors to make informed decisions.
A key consideration is Tesla’s valuation, which appears lofty at current levels. The stock’s forward-looking price-to-earnings (P/E) ratio stands at 110, significantly higher than the five-year average of 77. Additionally, Tesla’s growth rate has been showing signs of slowing down.
For investors seeking opportunities to deploy $1,000 at present, heeding the insights of expert analysts can be beneficial. Stock Advisor, known for its exceptional performance, has generated a total average return of 865%, surpassing the S&P 500’s return of 173%.* The team at Stock Advisor has recently highlighted their top 10 stock picks, including Tesla. However, there are nine other potentially lucrative stocks that investors may be overlooking.
In conclusion, while Tesla’s inclusion in the list of favored stocks presents an intriguing opportunity, investors should approach with caution due to the stock’s high valuation and decelerating growth. By conducting thorough research and staying informed, investors can make sound decisions aligned with their financial goals.
