Tesla (NASDAQ: TSLA) received a 4-star rating on Jim Cramer’s Constellation Index, the Mad Money host’s ratings of companies found in David Kostin’s list of popular retail stocks. Kostin is Goldman Sachs’ Chief US Equity Strategist. Cramer’s Constellation Index rated all the stocks on Kostin’s list and Tesla was the only one to receive a 4-star rating.
Cramer followed up his list of retail investors’ favorites with an article that analyzed each individual company. “Tesla's (TSLA) a tech company that makes cars that are in such high demand that I have fallen in line with it for about 600 points, too late for some cranks, but not bad for TV work. Four stars. Five if it would ever come down cause Musk is a genius,” he said about the EV automaker.
According to a note from Goldman Sachs released on June 12, stocks chosen by retail traders have been outperforming the ones favored by hedge funds and mutual funds, reported Barron’s. In the note, Kostin said that stocks favored by retail traders yielded “incredible” returns since late March. Based on Goldman Sachs research, popular retail trading stocks outperformed the S&P’s 36% rally, beating even the investment bank’s own hedge fund favorites.
@ValueAnalyst1 @vincent13031925 Wow... some great news from Jim Cramer tonight on $TSLA! His only 4 star ⭐️ rating on the list! “I like it even more after today’s 4% pullback” said Jimmy Chill @jimcramer pic.twitter.com/4Quk4WNG9y— biglongweedtesla13 (@chrisco72150659) June 24, 2020
Goldman Sachs also forecasted that tech stocks would continue to outperform. “As the market was falling, the sector was supported by its quality attributes, including strong balance sheets and high profit margins, as well as the resilience of its earnings,” noted the investment bank’s analysts.
In contrast, Goldman Sachs wasn’t confident in the energy sector, despite the impact the coronavirus has made in its future. According to CNBC, commodity strategists at Goldman expect “a correction in crude prices potentially as deep as 20% in the near term.
Taking Goldman’s thesis into consideration, TSLA is in a unique position. Tesla’s place in the business sector has been confusing for most analysts. Many still see TSLA as an auto company. However, Tesla has also been identified as a tech stock.
According to Morgan Stanley’s Adam Jonas, TSLA investors treat the company’s stock too much like a tech stock and ignore the risks it faces as a car company. TSLA bulls would argue that it’s impossible not to see TSLA as a tech stock given its work with Hardware 3.0, Autopilot, and FSD.
Then there is Tesla’s energy department. Goldman appears confident that the tech industry will remain strong, but doesn’t think the same about the energy sector. If that is the case, where does TSLA fit? Tesla Energy has been making great progress in 2020, despite the pandemic. Jefferies raised TSLA’s price target because it believed the transition to EVs and renewables would be expedited due to the pandemic. Scottish Mortgage manager James Anderson seems to have come to the same conclusion as Jefferies. Meanwhile, Goldman seems to think the opposite.
Based on recent analyst predictions, TSLA’s ambiguity makes it difficult to place. As such, it is getting harder for professional analysts to predict Tesla’s actual worth. However, what does remain certain is that retail investors see TSLA with crystal clear eyes.
Hat Tip: @chrisco72150659
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Ma. Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.