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GM was recently added back to the S&P 500. Ford is also recovering. The company reported sales rising 14% from last year. Ford’s Fusion reported its best-ever delivery in May 2013, by selling nearly 30,000 units.
ConclusionA stronger economy, especially in the United States, is supporting strong demand for automobiles. Tesla is a new-age technology company in the old economy of cars. Euphoria could continue to build, pushing Tesla even higher. Fear of overvaluation could also drive Tesla down. The bottom line is that investors do not know when the momentum would shift. One thing that is certain is that a bet against Telsa at this time could be ill-timed. Investors who do not have a position in the company should not take one at this time. Conservative investors who think the automobile recovery will continue might want to consider GM or Ford. Written by Chris Lau. Disclosure: Author has a long position in Ford (F).
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