Tesla (TSLA) shares have risen in recent weeks and are now testing resistance at its 200-day moving average. Analysts have been raising 2023 estimates at the same time, heralding the addition of this 21st century icon to the IBD 50 growth list.
The Inflation Reduction Act will work in the company’s favor, with bullish long range implications for the renewable energy sector. The stock’s 3-for-1 split on Aug. 24 may also add to gains.
TSLA stock is trading in a long consolidation with a 1208.10 buy point, which is still 30% above Thursday’s closing price of 908.52. As Tesla shares challenge 200-day moving average resistance, watch for patterns that hold clues to lower buy points.
The stock topped out over 1,200 in Nov. 2021, giving way to a long and complex corrective pattern that bottomed out in the 600s in May. Tesla has added nearly 300 points since that time, healing technical damage from the downturn. It’s also posted three strong quarters since the top, surpassing estimates by double and triple-digit percentages.
Tesla is now expected to earn $12.29 per share in 2022, a dramatic 81% increase over 2021. That bullish trend should continue through 2023, when a 46% EPS increase is now forecast.
This Nasdaq-100 component has a strong growth record, posting triple-digit earnings growth in five of the last six quarters.
The Composite Rating has lifted to a bullish 92 while the EPS Rating is lagging behind, at 77. Supply-chain issues fueled by the pandemic are weighing on that rating, which will scroll off the data series in coming quarters.
Perfect “A” Timeliness and SMR Ratings are noteworthy, leading to the stock’s new membership in the IBD 50. Tesla also ranks first in the IBD Auto Manufacturers’ Group.
Tesla Stock Split Will Also Drive Price
Shareholders approved a 3-for-1 stock split that goes into effect on Aug. 25.
Although a stock split does not change underlying valuation, it often results in price appreciation because more investors can buy the stock at the new and cheaper price. Starting Aug. 25, shares will trade in the 300 range, a more affordable price point that may attract greater buying interest.
Funds have increased their Tesla positions over the last eight quarters. Among index funds, American Century Focused Dynamic Growth Fund (ACFSX) and JP Morgan Large Cap Growth Fund (SEEGX)hold substantial positions.
The EV giant is a top 10 holding in Invesco’s growth ETF (QQQ) that tracks the Nasdaq 100. It is also a component in many speculative funds that include ARK Innovation ETF (ARKK) and ARK Autonomous Technology and Robotics ETF (ARKQ)
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