Should You Buy Tesla Stock?

Dear DTA, 

I wanted to buy Tesla stock a few months ago, but I didn’t have money. Now I have money. But the stock more than doubled. I’m not sure what I should do here. How do I know which way the stock is gonna go? 

-Charlie C. 

Hi, Charlie.

Thanks for writing. We love to hear from our readers.

I’m sorry you feel like you missed out on an opportunity.

But the good news is that the stock market is full of opportunities, at all times.

There are thousands of publicly-traded stocks.

And many of them are fantastic long-term investments – right now.

However, some aren’t.

And that’s what makes the stock market wonderful and challenging.

It’s up to us individual investors to sift through everything and find the most worthy opportunities for our capital.

The stock market is more a market of stocks than a stock market. 

It’s not one monolithic structure where everything moves in lockstep.

The market is instead a massive group of individual businesses.

And each business has its own set of unique dynamics.

But how do we find the right opportunities? 

And how do we know if what’s right in front of us is a good long-term opportunity? 

This is where fundamental analysis and valuation come into play.

Charlie, stocks are ultimately slivers of real businesses.

A stock is a slice of ownership in a company. 

It doesn’t matter if you’re buying 100% or .0001% of a company.

You should approach it all the same.

More importantly, you should approach your investing consistently within an investment strategy of your choosing.

Once you have a system in place, you can be systematic.

You’ll have to decide what strategy works best for you.

However, I can tell you that I’ve personally found dividend growth investing to be the best investment strategy out there.

Fellow contributor Dave Van Knapp explains what this strategy is, why it’s so fantastic, and how to successfully execute it.

He does that via his Dividend Growth Investing Lessons.

Dividend growth investing advocates buying and holding shares in world-class enterprises that pay reliable and rising cash dividends.

It’s a phenomenal way to build significant and durable wealth and passive income.

I used this strategy to go from below broke at 27 years old to financially free and retired at 33.

I lay out exactly how I did that in my Early Retirement Blueprint.

By investing my savings into high-quality dividend growth stocks like those you’ll find on the Dividend Champions, Contenders, and Challengers list, I built a real-money portfolio that generates the five-figure passive dividend income I live off of.

That real-money portfolio is my FIRE Fund.

The Fund, and the passive income it produces, is my gateway to freedom.

I don’t have to sell stock to pay my bills. I simply rely on growing dividends.

Jason Fieber's Dividend Growth PortfolioIt’s an awesome life situation to be in.

Now, that’s what works for me.

It may or may not work for you, Charlie.

But here are some facts.

Tesla Inc. (TSLA) doesn’t pay a growing dividend. They don’t pay a dividend at all, actually.

That’s because they can’t turn a profit. A company can’t afford to pay a dividend if they don’t earn any money. They certainly can’t afford to pay a growing dividend in that case.

How much their non-existent profit is worth to you as an investor is something you must discover through analysis and valuation.

Maybe the company is worth much more to you than $165 billion market cap they currently command.

Maybe it’s not.

I can’t tell you that.

What I can tell you with certainty is that if you’re not doing your homework, you’re doomed to fail.

You must know what you own. 

Otherwise, if you’re buying a stock with the hopes that someone else will pay more for it later, you’re speculating.

Speculating is a great way to lose money.

I’m not saying that buying Tesla stock is speculating.

I’m saying that buying Tesla stock (or any other stock) without doing any analysis and valuation homework is speculating.

Approach investing as a businessman. Because investing in businesses is a business.

If you take the time to read about dividend growth investing and decide that this is a strategy you’d like to pursue, make sure to follow my Undervalued Dividend Growth Stock of the Week series.

Every Sunday, I highlight a high-quality dividend growth stock that appears to be a compelling long-term investment opportunity.

These articles contain the fundamental analysis and valuation I’m speaking about, which allows each piece to build an investment thesis and arrive at a reasonable Undervalued Dividend Growth Stock of the Week by Jason Fieberconclusion regarding intrinsic value.

The lesson here is simple, Charlie.

Don’t speculate.

Educate and empower yourself.

Learn how to analyze and value a business before investing a dime of your hard-earned money.

Then you’ll set yourself up for success over the long term.

I’ll leave you with the most important piece of advice of all.

Make sure to start today.

I wish you luck and success.

Jason Fieber

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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.