Last quarter, Tesla's margins more than doubled to 17%, surprising many bears on Wall Street, and helping set off an epic short squeeze in the stock.

Lastly, he notes that the third-gen vehicle, which CEO Elon Musk has stated he would like to price around $35,000 to make it truly mass market will "fully close the cost gap to non-EV competition with margins in the 25% range."

Summing all this up, Graves believes that Tesla could eventually earn $14 per share later this decade, as the company eventually gets to $13 billion in annual revenue. To put that in perspective, Tesla's revenue jumped last quarter 83% annually to $562 million, earning just 12 cents per share. That's a far cry from $14 per share in annual earnings.

Tesla shares have had an incredible run over the past year, gaining 400%. Citing all of the above factors, Tesla may have significantly more room to run over the next few years.

"While we always recognized many positives in EV's and in TSLA, we were also highly cognizant of the risks, and we were admittedly late in recognizing the potential for investors to recognize the potential for Tesla to become a significant disruptive force in the Auto Industry (as Apple has been for the Smartphone)," Graves wrote. "But we believe that the stock can go significantly higher."

Shares of Tesla are higher in early Friday training, gaining 2.34% to $126.97.

-- Written by Chris Ciaccia in New York

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