- Here’s how to buy Tesla (NDAQ:TSLA) stock in Canada
- Take a look at Tesla’s EPS, P/E and PEG ratios for analyzing its stock
- Investment platforms for buying Tesla stock in Canada
- In CarMax’s recent 2023 Electric Vehicle Consumer Report, all four of Tesla’s models made the top 10 list of the most popular used EVs
- Shares of Tesla (NDAQ:TSLA) closed at US$241.05 Monday, down 6.06 percent.
Electric vehicle maker Tesla (NDAQ:TSLA) is making headlines again. In the first month of June, Tesla’s stock hit a four-month high, and its CEO Elon Musk has secured a partnership with U.S. automaker Ford. The deal is estimated to bring in $3 billion in new revenue because of Tesla opening its EV (electric vehicles) chargers for use with Ford’s cars. Alongside this, the United States has implemented an EV tax credit incentive. If this prompts you to want some shares of this EV and technology company, this article provides three steps to buying Tesla Inc. stock in Canada.
It’s also important to consider the impact of the global push for carbon neutrality by 2050 supported by several agreements worldwide. For example, Canada’s EV Action Plan led by Electric Mobility Canada (EMC) includes reaching 100 per cent electric passenger vehicle sales by 2030. The United Nations’ Paris Agreement has also set goals of reducing emissions by 45 per cent by 2030 and net zero by 2050.
Electric vehicles made up just 14 per cent of worldwide automobile sales in 2022, according to the International Energy Agency, which expects a big surge in EV sales this year. This increased demand is especially promising for the leader in the growing EV market, Tesla. If you have been following Tesla’s journey and are interested in getting some Tesla stock in Canada, we have outlined three steps to make it easy.
Three steps to buy Tesla stock in Canada
The three steps we will cover in this overview include analyzing the stock, choosing your investment amount, and picking your investment platform.
Step 1 – Analyze the stock
If you are on the fence and the headlines do not have you 100 per cent certain you want to invest in Tesla, it is time to do some math. Calculating some numbers can help clarify a decision.
Analyzing the stock involves three steps. We will calculate earnings per share (EPS), price-to-earnings (P/E) and price-to-earnings-growth (PEG) ratios.
For more details on these financial assessment ratios, we have provided some additional resources to better understand the value of a company.
Earnings per Share (EPS)
This ratio is the company’s profit divided by the outstanding shares of its common stock. A high EPS can indicate that the company has considerable value.
Tesla’s annual profit from 2022 was $12.6 billion. The number of outstanding shares was 3.17 billion. The division between these two numbers gives us an EPS of $3.97.
Price-to-earnings (P/E) ratio
This ratio is calculated using the company’s EPS (from above ratio), divided by its stock price.
The P/E ratio indicates a company’s current share price compared with its EPS. This gives investors relative share value, which can be used to compare performance among companies in the same industry. In addition, it can be helpful in judging performance based on historical data.
Tesla’s price-to-earnings (P/E) ratio:
Company’s share price: US$262.00
Earnings per share (as cited above): $3.97
With our own calculations, the P/E comes in at 57.. A quick Google search states that Tesla’s P/E ratio is 65. There will be discrepancies between when you are determining the EPS, but the range indicates a high P/E.
According to Google, a good P/E ratio is around 20 to 25. Companies with a P/E ratio over 30 can be seen as “growth stocks” meaning that investors typically expect the company to grow or to become profitable in the future.
A P/E score over 50 is considered high and might signal the stock is overvalued.
Price to Earnings Growth (PEG)
The P/E ratio will not determine if a stock is “overvalued,” or if the company is doing well only at that time. The PEG ratio is a stock’s P/E ratio divided by the growth rate of its earnings over time. This can help to show a stock’s value and help to chart its expected earnings growth.
Tesla’s price-to-earnings-growth (PEG) ratio:
P/E ratio: 65
Expected annualized earnings growth: 50%
PEG: 1.14
A lower PEG means a stock is cheaper relative to its growth rate.
Then you can compare these ratios to similar companies.
Step 2 – Pick your investment amount
Next, decide on the amount that you feel comfortable investing. A strategy can be investing a large amount all at once, or spreading it out periodically, investing $50 to $100 every couple of weeks.
You have several options – you can buy a single share or shares in an ETF (exchange traded fund) or an index fund that has Tesla stock. These funds are passively managed and have lower fees than mutual funds. They also offer a more diversified and less risky trading experience, potentially shielding investors from large price swings and volatile market conditions.
ETFs have professional asset managers, and this can be a great first step for new investors.
Some ETFs to consider are ARK innovation ETF, Invesco QQQ Trust and Direxion Daily TSLA Bull 1.5X Shares ETF. Just a side note, the Direxion Daily ETF is registering an incredible 111% gain in 2023.
Stockhouse has you covered with more information on U.S. ETFs and Canadian ETFs.
Step 3 – Choose an investment platform
To buy Tesla stock you need to open an account with a broker.
If you do not already have an online platform, it is recommended to review some of the existing platforms to see which one suits you best. Some platforms you can research include Qtrade, Questrade, Wealthsimple and CIBC Investor’s Edge. Some things to consider when looking at online platforms are low account and transaction fees and well as charges for inactivity.
Another important thing here is to pay attention to when using the online platforms is the currency conversion fee which is around 1.5 percent.
As a bonus, some platforms allow margin trading that can allow you to leverage the capital in your account. For example, with a 2:1 ratio, you can trade $1,000 of Tesla stock with a $500 account balance.
Once you decide on the platform, set up an account, decide on your stop limit, and stop loss.
Market order is the amount of Tesla stock at the next available price in the order book. The stop limit is the price you set as your profit target price. Once your trade reaches that price, your stock is sold. On the other side of that is a stop loss order where you decide the price you want to liquidate the stock, if the stock is down.
There you have it – the three basic steps for investing in Tesla stock. Stay up to date and informed at The Market Herald Canada; we are here to help you in your money-making journey.
And just a note, extra fees or taxes may be charged by brokerages for owning a foreign stock.
Why bet on Tesla?
Telsa was founded in 2003 and launched its IPO in June 2010, listing at US$17 per share, making it the most successful EV IPO in history. Tesla stock is now at US$210.09, with experts predicting future gains north of $1,000.
Tesla is also launching its revamped Model 3 this year and has started shipping Model Ys with new autopilot hardware.
Earlier this year, Musk implemented an aggressive price cut, dropping prices up to 20 percent to drive sales.
To further fuel Tesla’s upward momentum, used online car sale platform, CarMax recently published its 2023 Electric Vehicle Consumer Report, and all four of Tesla’s models made the top 10 list of the most popular used EVs.
And, most recently, in his drive for growth, Musk visited China to meet with Chinese business and political leaders.
Musk’s 13 per cent interest in Tesla makes up around 58 per cent of his net worth. As he eyes overtaking French luxury tycoon Bernard Arnault as the richest person in the world, you can bet Musk will do all that he can to elevate Tesla’s stock. If you want to get in on the ride, and Tesla’s potential growth, following the steps in this article can help you add Tesla to your investment portfolio.
Shares of Tesla (NDAQ:TSLA) closed at US$241.05 Monday, down 6.06 percent.
Join the discussion: Find out what everybody’s saying about this stock on the Tesla Inc. Bullboard, and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here