Tesla Crushes Deliveries, Potential Bitcoin Ban and Reopening Plays to Watch

Tesla crushed its delivery targets for Q1, delivering 184,800 vehicles. That figure represents more than 100% growth from last year, as Q1 2020 deliveries were 88,400. In addition, Tesla beat estimates of 169,000 deliveries, a bullish signal for Tesla and electric cars in general as it shows customer adoption is faster than experts have initially anticipated.

Tesla is likely be up Monday, but there are a few things to keep in mind before blindly jumping investing during today’s trading session. First, it’s not guaranteed that Tesla will absolutely skyrocket this week. Sure it could, but keep in mind that a lot of future growth is already priced in.

Tesla is up 540% year over year, so a 100% growth rate in deliveries shouldn’t be a total shock to the market — and most analysts were expecting similar numbers to these anyways.

The other thing to keep in mind is that 100% delivery growth doesn’t mean revenues will double. Product mix will take a big account into what happens with revenues — and that could be all over the place.

Finally Biden’s infrastructure plan and his tremendous push into a “green economy”, Tesla could have significant pent-up demand.

As famed Tesla analyst Dan Ives stated:

"In our opinion the 1Q delivery numbers released on Friday was a paradigm changer and shows that the pent-up demand globally for Tesla's Model 3/Y is hitting its next stage of growth as part of a global green tidal wave underway. We now believe Tesla could exceed 850k deliveries for the year with 900k a stretch goal, despite the chip shortage and various supply chain issues lingering across the auto sector. While the EV sector and Tesla shares have been under significant pressure so far this year, we believe the tide is turning on the Street and the eye popping delivery numbers coming out of China cannot be ignored with the trajectory on pace to represent ~40% of deliveries for Musk & Co. by 2022."

We’ll likely see a renewed interest in Tesla stock and options this week, spawning several trading opportunities. We expect implied volatility (IV) to spike on options, meaning it could be a good opportunity to sell premium. For more info, check out our options newsletter.

Reopening Plays - Stocks to Watch

Jefferies upgraded Uber (NYSE:UBER), giving it a $75 price target based on a likely surge in rides as all areas of the US continue to reopen. Keep in mind that Uber is up 121% over the last year even though its ride business was devastated in 2020, so this isn’t a deep value reopening play like we highlighted here. The valuation is still pretty high, but analysts are thinking that Uber Eats carried the load in 2020 and now the rides part of the business will see explosive growth in 2021. 

Jefferies called Uber its “top reopening play”, and is implying 38% upside with its price target. Check out this article that breaks down the bull case for Uber.

Carnival Cruise Lines (NYSE:CCL) reports earnings on Wednesday before the market open and is one of the top reopening plays to watch. One analyst believes Carnival is set to double as demand will return instantly once no-sail orders are lifted. Q1 earnings reported on Wednesday will likely be pretty bleak, so adding to your CCL position after earnings could be smart. However, management may focus the earnings release on optimism for Q2 and beyond, so adding beforehand could make more sense.

Investors will likely be more concerned with Carnival’s debt situation, so an update on liquidity will likely do more than revenue figures to move the stock price one way or the other. 

Citi recently gave Carnival a buy rating. Here’s their justification:

"We expect strong pent-up demand to be supportive to vacation booking trends. With vaccine roll out under way, mandatory testing regimes being put in place, and on board health care facilities we think the cruise lines are well placed to capitalize on this demand."

A small cap idea that caught my eye on Seeking Alpha is Armanino Foods (OTC:AMNF). It’s a small cap food manufacturer that supplies packaged Italian spices and foods to restaurants and other manufacturers. Their sales dropped 25% as restaurants in their home state and largest market, California, faced some of the harshest Covid restrictions over the last year. 

Check out the detailed write-up here.

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Bitcoin

Ron Paul, former congressman and libertarian, warned that a government crackdown on bitcoin and safe haven assets might not be safe from the government.

“The government is the threat. “They will crack down because they have the ability to do it.” - Ron Paul

Ron Paul is not alone in this thinking. Ray Dalio and Michael Burry have also stated that the government might change tax regulations preventing a flight in capital to safe haven assets.

This wouldn’t be the first time the government confiscated real assets that were undermining the U.S. Dollar. In 1933, President Franklin D. Roosevelt forbid the hoarding of gold, gold bullion and gold certificates in the United States.

The reason? Hard times caused the hoarding of gold which stalled economic growth and worsening the Great Depression.

Could this happen again? Absolutely. If the U.S. Dollar collapses, the United States will collapse. Politicians will do everything in their power to keep this house of cards standing.

Investing Thoughts

  • “Rule #1: Don’t lose money. Rule #2: Don’t forget Rule #1.”Warren Buffett

  • “Minimizing downside risk while maximizing the upside is a powerful concept.” Mohnish Pabrai

  • “It is impossible to produce superior performance unless you do something different from the majority.”John Templeton

  • “The secret to investing is to figure out the value of something – and then pay a lot less.” - Joel Greenblatt

  • “Behind every stock is a company. Find out what it’s doing.”Peter Lynch

Stock Picking Service

We have put out three research reports for our stock picking service so far.

The first idea has fallen since we initiated research on it. I believe the idea still holds and a potential buyout or major asset sale is on the horizon. I have added substantially to my position and plan to hold through the volatility. Earnings should be released before the 15th which is when we will find out if I am right or wrong.

Idea two has performed well. The stock is up since we initiated research. Management guided to $18 million in EBITDA for 2021 as the economy reopens and there is potential pent-up demand for new clothes. I think the $18 million is a low-ball target and could be as high as $25 million. If revenues return this company should generate a lot of free cash flow.

We published idea three this Friday when the market was closed. We believe this stock has the potential to be a double over the next 12-18 months as the economy reopens and women begin to shop for clothing again. This idea has a higher margin of safety than the prior two ideas as the balance sheet is in better shape, there is optionality with potential brand sales and they own a huge headquarters and distribution facility that I estimate could be worth 1/3 the market cap.

If you would like access to our top stock ideas subscribe today for only $10 dollars per month.