We recently published a list of the 12 Best Long-Term Growth Stocks to Buy Now. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against other best long-term growth stocks to buy right now.
Expectations Regarding Fed’s Rate Cuts in 2025
Released on Friday, February 7, the January jobs report showed resilience in the labor market with higher-than-expected wage growth. December’s monthly job gains also showed an upward revision, highlighting that the US labor market ended 2024 in a better position than previously reported. Economists are thus of the opinion that the Federal Reserve may not cut rates in the near future. Consequently, this increases pressure on inflation data to cool down before the central bank considers slashing borrowing costs.
On January 30, Jeffrey Gundlach, CEO of DoubleLine Capital, appeared on CNBC’s “Closing Bell” to discuss the stock market and the Fed’s decision to leave rates unchanged. Sticking to the opinion he gave in December, Gundlach was of the view that 2025 would bring a maximum of two rate cuts by the Fed. He reiterated that he was not predicting two cuts but that two would be the maximum number attained in 2025, keeping one rate cut as the base case for the year. The unemployment rate went up for several consecutive months before ticking down, which Gundlach thinks is a matter of deep solace for the chair of the Federal Reserve, Jerome Powell.
READ ALSO: 10 Best Medical Device Stocks To Buy According to Hedge Funds and 12 Best Hair Care Stocks to Buy According to Hedge Funds
What Does the 2025 Outlook for the Stock Market Look Like?
On February 10, Mary Ann Bartels, Sanctuary Wealth’s chief investment strategist, appeared on CNBC to discuss the 2025 outlook for the stock market. She showed bullish sentiment towards the market, particularly due to strong earnings growth. Comparing the current environment to previous periods of innovation, such as the 1920s and the 1990s, Bartels highlighted the role of robotics, AI, and Web3 in driving long-term growth in the present.
She noted that companies today fund investments with cash and equity rather than excessive leverage, unlike the 1990s. Her estimates showed that the S&P could reach 7,200 to 7,400 this year and 10,000 to 13,000 by the decade’s end, as she expects the bull market to extend through 2029 to 2030.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 growth stocks. We checked their 5-year revenue growth (at least above 15%) and then selected the top 12 most popular stocks among elite hedge funds as of fiscal Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Tesla, Inc. (NASDAQ:TSLA)
5-Year Revenue Growth: 31.78%
Number of Hedge Funds: 99
Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells high-performance electric vehicles and energy generation and storage systems. It operates through two segments: energy generation and storage and automotive. However, the company isn’t merely an automotive manufacturer; investors regard it as a technology company due to its other projects, most of which feature AI.
These projects include its humanoid robot line, Optimus, and its autonomous vehicle fleet, Cybercabs. In Tesla, Inc.’s (NASDAQ:TSLA) fiscal Q4 2024 earnings call, CEO Elon Musk described Optimus as holding the potential to generate over $10 trillion in revenue. Since Musk has aligned himself with Trump’s administration, the stock price has risen around 70% since the US presidential election, which is expected to bode well for the company in the coming months as well.
Tesla, Inc. (NASDAQ:TSLA) plans to begin selling Optimus robots by 2026. It also has plans to build a ride-hailing network for Cybercabs, which operate without steering wheels or pedals. Since these cabs do not require a human driver, they can operate round the clock and potentially generate a high-profit margin revenue stream for the company. Tesla, Inc. (NASDAQ:TSLA) ranks 12th on our list.
Analyst Andy Swan from LikeFolio explained his bullish thesis on Tesla, Inc. (NASDAQ:TSLA) in a latest program on Schwab Network and said the following about the company in his “infinitely long” bullish position” on the EV maker:
“I think you can just look at the fact Elon Musk bet very big on this election and he won. I think that is, you know, there’s good reason to think he will continue to win with this new administration in place, and that is a deregulated environment that allows not just the AI part of things but also the full self-driving features that Tesla has rolled out and the path to autonomous vehicles, the autonomous taxis rolling out. I think it’s just gotten a lot clearer with a Trump administration rather than one that’s a little more heavy-handed from a regulation side.
As far as LikeFolio data goes, we’re seeing Tesla kind of buck what everybody thought was happening, which is everybody thought that Tesla was getting less popular via its founder or not its founder, but its CEO’s political takes. What we’re seeing is that web visits are up year-over-year, app usage is up year-over-year considerably, and we look at the app usage of Tesla as a really kind of cool metric in terms of Tesla being a viral kind of word-of-mouth product. Because what Tesla’s integrated into the app are some really cool features that pretty much no other car in the world has, such as the ability for the car to come pick you up from an empty parking spot to the door of the restaurant that you’re just leaving. So, that type of word-of-mouth viral type of feature set in the app is starting to grow in usage, and that means more and more people getting exposed to Tesla. So, we maintain our multi-e, you know, infinitely long bullish position on Tesla.”
Overall, TSLA ranks 12th on our list of best long-term growth stocks to buy right now. While we acknowledge the potential of TSLA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
