Is Tesla Motors a Buy After an Explosive Run?

With shares of Tesla Motors (NASDAQ:TSLA) trading around $165, is TSLA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock's Movement

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components and sells electric powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores, as well as over the Internet. Consumers and companies are looking to save at the pump, and what better way than with electric vehicles?

When Tesla Motors first introduced its unconventional Model S finance plan back in April, critics questioned the strategy's potential and charged the automaker with overstating customer savings. However, now it looks like electric car genius Elon Musk is once again ready to have the last laugh, because more and more analysts are coming around and recognizing the plan's boosted revenue potential, and soon, more traditional automakers may also be jumping on board.

T = Technicals on the Stock Chart Are Strong

Tesla Motors stock has been flying higher in the last several months. The stock is currently trading at all-time high prices and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Tesla Motors is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Tesla Motors options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Tesla Motors Options	55.44%	13%	11%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let's take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Tesla Motors's stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Tesla Motors look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	105.62%	113.95%	-1.27%	-66.67%
Revenue Growth (Y-O-Y)	1420.08%	1762.78%	677.88%	-13.13%
Earnings Reaction	14.34%	24.39%	-8.77%	8.92%

Tesla Motors has seen improving earnings and rising revenue figures over the last four quarters. From these numbers, the markets have been very excited about Tesla Motors's recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Tesla Motors stock done relative to its peers, General Motors (NYSE:GM), Toyota Motor (NYSE:TM), Ford Motor (NYSE:F), and sector?

	Tesla Motors	General Motors	Toyota Motor	Ford Motor	Sector
Year-to-Date Return	386.40%	26.10%	35.64%	34.29%	32.91%

Tesla Motors has been a relative performance leader, year-to-date.

Conclusion

Tesla Motors offers electric vehicles that consumers and companies are opting for over other luxury vehicles. The company's new spin on financing may be attracting other vehicle companies worldwide. The stock has been flying higher over the last few years and is now trading at all-time high prices. Over the last four quarters, earnings have been improving while revenues have been rising which has left investors very excited about the company. Relative to its peers and sector, Tesla Motors has been a year-to-date performance leader. Look for Tesla Motors to continue to OUTPERFORM.