Elon Musk signaled three stocks to consider buying as he answered questions during the recent Baron Funds Investment Conference in New York.
Musk, the visionary and entrepreneurial founder and chief executive officer of Tesla Inc. (NASDAQ: TSLA), used moments of self-deprecating humor amid his analysis of business and technology challenges to highlight three stocks worth buying without specifically recommending any of them. I attended the event and watched him display restraint when responding to questions about the valuation of Tesla, his market-leading electric vehicle company, as well as his newly acquired social media company, Twitter Inc. (NASDAQ: TWTR).
His “surprise” appearance at the Baron Funds conference on Friday, Nov. 4, gave Musk an opportunity to offer updates and respond to queries on the same day about both of the large public companies he controls and now leads. His interview at the Metropolitan Opera House with Ron Baron, chief executive officer of Baron Capital, the holding company of Baron Funds, and portfolio manager of Baron Partners Fund and Baron Focused Growth Fund, occurred the day Twitter announced plans to cut roughly 3,700 jobs, or almost half its workforce. He also discussed SpaceX, his privately held rocket launching and broadband satellite services company.
Paul Dykewicz meets with Ron Baron, CEO of Baron Capital
Elon Musk Signaled Three Stocks to Consider Buying in the Future
Tesla voluntarily recalled 40,168 of its 2017-2021 Model S and Model X electric vehicles on Oct. 25 due to the risk they could incur a loss of the power steering assist system (EPAS), according to a Nov. 1 filing with the National Highway Traffic Safety Administration. The recall, announced on Tuesday, Nov. 8, resulted in Tesla’s stock closing at a 52-week low of $191.27 per share.
Chart courtesy of www.stockcharts.com
Tesla’s mission statement is to accelerate the “world’s transition to sustainable energy,” and Baron Funds are the largest shareholders of the electric vehicle maker’s stock. Musk, who has been described as a “modern-day Leonardo de Vinci,” told the audience of about 5,000 attendees that he believed Tesla has significantly “accelerated the advent of sustainable energy.”
“Before Tesla, no one was doing electric cars,” Musk said in response to a question from Baron. “As a result of Tesla, almost every major car company in America is building electric cars.”
After Baron’s half-hour interview with Musk ended, the fund company chief called on Mark Skousen, a major investor in Baron Funds and leader of the Forecasts & Strategies investment newsletter, to ask a question.
Elon Musk interviewed by Ron Baron.
Elon Musk Signaled Three Stocks to Consider Buying: Tesla?
Skousen began by quoting the Roman philosopher Seneca, saying, “There is no great genius without a touch of madness.” Musk responded humorously, “I like the madness part.” Then Skousen asked Musk why an investor should favor Tesla, of Austin, Texas, trading at 70 times earnings, rather than dividend-paying Mercedes-Benz (OTC: MBGAF), of Stuttgart, Germany, selling for five times earnings. Both companies sell electric vehicles.
As this video shows, Musk did not disagree with the analysis. Instead, Musk said he has told people in the past that Tesla shares were too high, “and they ignore me and buy the stock anyway.”
Mark Skousen has post-conference conversation with Ron Baron.
Mercedes-Benz, an industry leader in luxury vehicles, is delivering “blockbuster sales and earnings,” Skousen advised his Home Run Trader advisory service subscribers. Skousen, who also is a presidential fellow in economics at Chapman University and the school’s inaugural Doti-Spogli Chair in Free Enterprise, recently recommended Mercedes-Benz to his subscribers.
Chart courtesy of www.stockcharts.com
Elon Musk Signaled Three Stocks to Consider Buying: Mercedes-Benz
Mercedes-Benz is one of the world’s preeminent luxury car companies and sells vehicles in almost every country, Skousen wrote to his Home Run Trader subscribers. The company also offers financing, leasing, car subscriptions, fleet management, digital services and insurance brokerage options.
“Traditionally, Mercedes has sold only gas-powered cars, but that is rapidly changing,” Skousen opined. “Its sales of electric cars surged 64% last year, and Mercedes achieved several technological milestones.”
Mercedes introduced four electric vehicles and attained the first international system approval for SAE-Level Three automated driving. Indeed, the company is rolling out a raft of new electric vehicles this year and beyond.
Despite an ongoing semiconductor shortage and bottlenecks in logistics, third-quarter earnings at Mercedes soared 59% on a 19% increase in sales, Skousen noted. The manufacturer found “particularly robust demand” for its premium models and electric vehicles, he added.
Demand continues to outstrip supply, Skousen continued. With the global supply chain returning to normal in the months ahead, Mercedes is well positioned to capitalize on future sales growth, he observed.
Acquisition May Electrify One of Three Stocks to Consider Buying
In October, Mercedes finalized a supply agreement with Rock Tech Lithium to secure the high-quality lithium needed in battery production. This will allow it to rapidly scale up its production of fully electric vehicles.
Despite high inflation and interest rates, retail data so far show highly affluent consumers are not cutting spending. Essentials make up a small percentage of their total spending, so the well-heeled consumers have money to spurge on luxury goods, Skousen commented.
Skousen has recommended Tesla profitably twice in the past in one of his trading services but opined that he now sees better value in Mercedes-Benz. In 2020, Skousen recommended that his subscribers buy Tesla, then advised selling half of the stock on Feb. 4, at $912.16 for a 58.07% gain. The remainder stopped out on Feb. 5 at $823.39 for a 42.69% profit.
Elon Musk Signaled Three Stocks to Consider Buying: Twitter
Social media aficionados may not universally love Twitter, but it is a potential turnaround opportunity. Musk recently bought Twitter for $44 billion, only for its user base to fall by more than 1.3 million users in the following week.
The layoff of nearly half Twitter’s employees and publicly disclosed plans to consider reinstating the Twitter accounts of former President Donald Trump and other prominent people whose politics did not mesh with what Twitter’s content screeners had deemed acceptable may be allowed back on the platform.
Activists have been urging many Twitter users to flee the company’s subscriber base for other services. It would be “deeply ironic” if an angry Twitter user took him “out,” Musk said.
Elon Musk Signaled Three Stocks to Consider Buying at Some Point
Musk conceded that he tried to “get out of the deal” of buying Twitter. He drew laughter by imitating the voice of someone he recalled seeing from a scene in the “Godfather” movie who said he tried to “get out” and couldn’t.
As for buying Twitter, Musk asked Baron rhetorically, “What could possibly go wrong?”
The goal will be to transform the struggling business and ultimately turn it into “one of the most valuable companies in the world,” Musk said.
Baron asked Musk how he would prevent “antisemitism” and racially-based verbal bashing of certain groups of people on Twitter. Musk responded that “content moderation” policies have not changed at Twitter since he bought the company.
“It is not okay to engage in hateful content on Twitter,” Musk said. “We have had targeted attacks where temporarily people were able to put some hate speech on Twitter but then it has been taken down immediately.”
Chart courtesy of www.stockcharts.com
Bivalent COVID-19 Vaccine Offers Heightened Protection Against New Variant
A new bivalent COVID-19 booster in the United States offers protection against the omicron BA.5 variant, now the predominant strain of the virus. I arranged to receive the new booster after learning it had become available at pharmacies near my house.
I received the booster on Oct. 16, but there remain 200-plus million Americans who are eligible but have not yet gained the protection. New cases and deaths can hurt businesses such as Tesla, Mercedes-Benz and Twitter, so availability of a bivalent booster to enhance the vaccine’s efficacy could help both public health and the U.S. economy.
Cases in the country totaled 97,797,561 and deaths reached 1,072,921, as of Nov. 9. America has the dreaded distinction of amassing the most COVID-19 cases and deaths of any nation. Worldwide COVID-19 deaths totaled 6,602,7, as of Nov. 9, according to Johns Hopkins. Global COVID-19 cases reached 633,364,872.
Roughly 80.2% of the U.S. population, or 266,401,911, have received at least one dose of a COVID-19 vaccine, as of Nov. 2, the CDC reported. People who received the primary COVID-19 doses totaled 227,377,753, or 68.5%, of the U.S. population, according to the CDC. The United States also has given a bivalent COVID-19 booster vaccine to 25,483,818 people who are age 18 and up, accounting for 9.9% of the U.S. population in that age range.
For those who like that Elon Musk signaled three stocks to consider buying, the key could be patience to avoid overpaying for any of them. The chance to buy all three stocks at relative discounts reduces the risk of further fallout in their potential future returns.
Amid political discord, Russia’s stepped-up shelling against Ukraine and rising recession risk after four consecutive 0.75% rate hikes by the Fed in June and July, as well as Sept. 21 and Nov. 2, Elon Musk signaling three stocks to consider buying makes them worth watching, if not purchasing sooner or later.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.
