Mampilly’s “Bigger than Amazon and Google combined” Stock Tease

By Travis Johnson, Stock Gumshoe, January 26, 2018

I know a lot of my readers follow Paul Mampilly pretty ardently, partly because of the fact that his publisher, Banyan Hill, is one of the more aggressive promoters in newsletterdom these days, and partly because he made some very strong picks with his first, heavily promoted service — particularly the teased pick of STMicroelectronics (STM), which his publisher has been pushing pretty heavily, off and on, for more than a year and a half (first covered here, back before his publisher changed names to Banyan Hill).

So today we’ve got a quick bonus solution for you, before I get back to working on my Annual Review for the Irregulars… though really, I should call this one a “guess,” not a solution, because he doesn’t drop enough clues to give us any real certainty. What’s he recommending now?

He’s pitching “New Energy” as a “Mega Trend” for his Profits Unlimited subscribers — meaning renewable, portable, storable energy. And this is what he says about his stock:

“This month, I told my readers in Profits Unlimited to buy into the company that’s leading the new-energy revolution … and that it’s going to be bigger than Amazon and Google combined.

“You see, this company has products that touch every aspect of new energy, from getting its energy from natural sources, to storing it so it can be generated locally and finally, to making it portable so that it can be used for travel.

“With those aspects combined, this company is set to disrupt three massive industries.”

The basic argument is that this company is “disruptifying” those three large energy markets, like Google and Amazon and Netflix disrupted their established markets (advertising, retailing and television) in building dominant businesses that sucked the life out of the older players in the industry (my words, not Mampilly’s).

And he concludes:

“Right now, the energy, utilities and transportation industries are about to go through what Netflix, Amazon and Google did a few years ago to their various industries.

“The old is about to get wiped out, and the new is about to take its place.

“This is an extraordinary opportunity to make massive gains if you are willing to buy into the new companies, like the one I just recommended to my Profits Unlimited readers.”

So what’s he actually recommending? My guess — and it is a guess, this time — is Tesla (TSLA). I can conjure up no other company that has meaningful business in both generating renewable electricity (through Solar City), storing electricity (batteries, including the PowerWall as well as the utility-scale projects they’ve attempted — notably in Australia), and disrupting transportation (through high mind-share and evangelism in electric vehicles).

You’ve probably heard of that stock, no?

So what do you think? Tesla is the very definition of a “battleground” stock, there is no way to estimate what you think the company is worth unless you look a few years into the future and believe that Elon Musk will succeed in creating a much higher-volume electric car manufacturing company and cross-sell those Tesla owners on Powerwall home batteries and Solar City rooftop solar installations.

To my mind, there is no reasonable way to use real or near-term numbers to justify the price of Tesla shares, though analysts keep trying, you have to use forecasting and belief — which doesn’t mean Tesla can’t succeed, it just means that you have to see the future to believe it will succeed, you can’t base your assessment on the rate of growth or the current or anticipated cash flow. To a large degree, Tesla shares are a bet on Elon Musk’s vision of the future and his ability to muscle the rest of us into his vision, and that has worked extraordinarily well for many years.

The numbers that you might use, were you to be so inclined, would probably be the 2019 numbers, the first year that analysts foresee Tesla making a profit. The analyst estimate is for earnings of $4.40 per share in 2019, on $26 billion in revenue (though the range of estimates is huge for both). At that rate, Tesla would be trading at about 2X 2019 sales and 77X 2019 earnings.

The only company with a somewhat similar business that’s in any way comparable on those metrics, at least that I can think of after some brainstorming, is Ferrari (RACE) on price/sales (much higher, about 5X), but that’s because its supercars are an incredibly high-margin luxury business (about 50% gross margin… Tesla’s gross margins in the low teens are squarely between Ford’s and GM’s, both of which trade at about 0.3X sales). Solar installers and product developers don’t trade at anywhere near those valuations, with the possible exception of favored US manufacturer First Solar (FSLR), which is really the sole beneficiary of the recently discussed solar panel import tariffs — solar installation is a growth industry still, but most installers are not particularly high margin companies and the few that are public trade at pretty cheap valuations.

But still, those are numbers that you can work with as you build your assumptions… although we should remember that analysts have been irrationally optimistic about Tesla’s earnings for several years (three years ago, the anticipation was that 2017 would bring $7 per share in earnings — in actuality, Tesla is likely to end the year losing close to $9 a share, thanks in some part to the much slower-than-expected rollout of their “Model 3” lower-priced electric car). Analysts have also priced in an estimate that Tesla will grow earnings at 35% a year, on average, over the next five years… so perhaps you can make that work in your brain if you use the imagined 35% growth number and the guesstimated 2019 earnings number to say that the 2019 PEG ratio could be not much above 2. Which ain’t so bad.

But really, you’ll probably find yourself stuck if you justify an investment in Tesla based on their current or forecasted financials, because it’s not a stock that is driven by analysts — it’s driven by Elon Musk and the power of transformation and imagination as he upends the fossil fuel industry and the car industry and changes the American landscape for the better. You either believe in that and say “Elon will make it happen,” or you look at the numbers and say, “this is the most ridiculously valued industrial company I’ve ever seen.”

Neither is wrong until the share price says its wrong. People have been ardently betting against Tesla because of its wild valuation for five years now, to their detriment, so for now the short side is wrong. This year, I don’t know which way that will turn — presumably a lot will rest on the ability of Tesla (or lack thereof) to really mass-manufacture those Model 3 cars that have been pre-ordered, I expect that if the current logjam loosens, as Tesla says it will, and they begin to deliver those new cars as promised, the stock will probably react well to that… if there are further delays, the stock will probably disappoint. Throw in the new tariffs on Chinese solar panels and whatever you think the future government incentives will be on electric cars or solar power, and you can make your own guesses.

But really, it’s about belief in Musk’s future — buy that and you’ll want to own the stock, doubt it and you’ll find no rational reason to own Tesla at this price. You can make your own call on that, all I can do is guess for you that Mampilly is recommending Tesla to Profits Unlimited subscribers (and, indeed, it has been recommended over and over by growth-stock services over the years). If you’ve got a call on Tesla, let us know with a comment below.

Disclosure: I own shares of both Alphabet (Google) and Amazon, but not any other stock mentioned above. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.


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101 Comments on "Mampilly’s “Bigger than Amazon and Google combined” Stock Tease"

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Peter Whimsey
Irregular
10

$40 is about where I bought some puts- oy vey!
But it has been probably the most fascinating stock I have ever followed- watching the bears and bulls fight it out. I get several emails a day from Seeking Alpha and few days go by that there is not an impassioned article pro and at least one con. I personally think that Jim Chanos is going to make a lot of money on this one, but I haven’t bet either way for the last 300 points, and have no intention to do so.

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Steve Jensen
Guest
0

The only real question on Tesla is, When will it implode and others pick up the pieces.”

schubrrw3212
Member
74
Brilliant thinking, Steve! The basic issue in “New Energy” is that there’s not any new energy in it. The entire subject is about how to deliver existing energy in other ways. Can batteries outperform generators in cost? A century ago, copper was cheap and sulfuric acid was pricy, so we built enough generators to cover peak demand and used the cheapest energy to run the generators that cover the base load. Nowadays we have two competing new battery technologies taking on lead-acid: Nickel Metal Hydride and Lithium Ion. That resulting 3-way race, is unpredictable. The outcome depends on the cost… Read more »
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Loy
Guest
0

The “new” in new energy is renewable. Fossils are extinct, which might be a clue to “old” energy resources.

Jcat
Guest
0

What are the best junior miners to buy now?

saint stephen
Irregular
272

I don’t like companies that don’t make money. Why pay for the future today?

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manhattanmadman
Member
140
$tesla Why pay for a stocks future potential? Because with Tesla I can buy solar roof tiles to power and heat my house. I can add their wall battery and keep energy stored. I can buy a car that charges off that battery and never buy gas again. With Tesla’s products I’m never paying for energy again. If things go well I can even sell back energy into the grid. I’ll pay for the future because this is th future. Think back to how much money you have pumped into your car or house to keep them running. Many American… Read more »
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viktor69
Irregular
14

I’m all in for EV’s and alternative energy and really hope we’ll stop burning fossil fuel soonest but, what I fail to understand is why Tesla will thrive in such an environment? There are plenty of companies that produce EV’s (I see some Renault’s through my window actually) and many more when it comes to solar panel and the like. And those companies show a profit unlike Tesla…to me the current stock price reflects just Mr Musk’s vision, nothing more. The journey from visions to reality requires an excellence in implementation, not really Tesla’s strength.

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existentialist
Guest
0

Because project managers and financial analysis are cheap and you can’t buy a “vision”. Why does Apple do well in the smartphone sector when they took 3 years longer to implement biometrics?

Torospartan
Guest
0

If we don’t burn the fossil fuels what will we do with them? There are many things produced from Crude Oil (Furniture, Clothing, Insulation, Plastics, etc). Even EV vehicles use a lot of plastic. Batteries are ok in cars but I wouldn’t fly an airplane that didn’t use jet fuel and If I lived in a cold environment would not want to have to rely on a battery for heat instead of using heating oil.

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Loy
Guest
0
Elon Musk’s vision brought the planet to the realization there is a better way than perpetual air, H2o & soil pollution, perpetual oil wars, 9/11/01, Exxon-Valdez, Gulf Horizon, emf drop across the grid, distributed generation vs black & brown outs, TMI, Pripyat & Fukushima, a tile roof protecting us & the home while powering us & the home, negative electric utility rates charging our stationary & mobile batteries. If Tesla never makes a dime of profit & goes bankrupt, it will have been the most profitable venture ever produced by mankind, because it introduced us to the sustainable, which fossil… Read more »
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dcohn
Irregular
200
There is no fossil fuel. Oil is a natural renewable energy of Earth our planet. There is zero evidence it is from degraded dinosaurs and so utterly stupid to even consider that animals turned to oil floating on too of the land. Google it. There is tons of scientific evidence explaining exactly how oil is simply part of the geology of the planet. By lying and saying how rare it is Rockefeller or whichever animal of Greed at the time basically created an impassible monster for over a century now. Is it really not much more logical if you think… Read more »
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frank_n_steyn
Irregular
143

Batteries have to be replaced.

archives2001
Irregular
71

As well as solar panels!

Randall Hart
Guest
0

I bought PRIUS HYBRID IN 06, ENGINE DIED THIS December, dealership said battery looked as good as new, we had 408000 miles on it.

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glbcpa1
Guest
0

So, you immediately purchased a new one, right? Just curious to know.

Loy
Guest
0

Bodies coming home from the oil wars have to be replaced.

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Torospartan
Guest
0

First you will pay a premium price for that Tesla. Then you will pay higher maintenance costs vs a Toyota or Honda whose gas engines are classified as being pretty close to zero emissions vehicles. I live in SoCal and pay $24/mo for gas and about $96/mo for electric. My water/trash bills and cable/internet and cell phone bills are all higher. As far as environmental impact – 50% of a vehicles environmental impact is made in the production of the vehicle. EV vehicles have both higher production and disposal environmental impact that gas engine vehicles.

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Loy
Guest
0

How many gas engine (non-hybrid) vehicles die at 400,000+ miles?

J.Dean
Guest
0

if people kept them they would last beyond that. My truck has 330k and counting. Most people buy or lease a new one instead of maintaining or repairing what they have. Another factor is keeping up with the Joneses. A gas engine with proper maint can last over 500K miles. Also note I have had one repair. Power steering pump failure. It is the one thing I have never flushed and ran synthetic fluid in. I will not do that again

J.Dean
Guest
0
I can do all those things too. Only I would do it with companies that make a profit. They are not the only electric vehicle producer, solar company or battery producer. Tesla is however the only one who does all of those. They just do not do them well. Too many ideas and irons in the fire tearing him into multiple directions. If it weren’t for the hype people would have dropped his stock a long time ago. Think GE and it’s stock. GE is closer to profitable. It pays a dividend. Their products can be and are useable today.… Read more »
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Loy
Guest
0
Exxon doesn’t make money. It is on welfare – oil depletion allowance, carbon credits, depreciation allowances, no charge backs for zero pollution remediation & oil wars, etc. Renewables will never be granted the welfare of a depletion allowance. Fossils will never have access to free resources such as gravity, temperature differentials, wave & tidal action, wind & sunshine. Renewables will be profitable because mining, oil wars, drilling, shipping, piping, refining, & a 2nd shipping, + air, H2o & soil pollution can never compete with free resources & zero emissions. There is a century of book cooking that lets markets say… Read more »
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dcsipp
Irregular
5

It’s called investing. Albeit with risks.

Dan
Guest
0

I recently drove from Michigan to Colorado, making my first stop for the night in Ogallala Nebraska at the Lonsome Dove hotel. In the parking lot behind it were 8 very impressive charging stations for Tesla cars only with two cars plugged in. I don’t travel or stay in hotels much so this is the first anything from Tesla I’ve seen. I was surprised and impressed. The investments are costly I’m sure. The cars are pretty sharp and it appears you can drive across the country and find places to recharge.

tomtom73
Member
19
All the schemes for electric vehicles and non-carbon fueled electric generation are based on foolish government money grants/incentives/tax incentives. Even with government favors the schemes barely break even or get close to making a profit. Also, the battery storage technology has hit a wall, even with lithium as the periodic table of elements offers no successor element that will work. Electric vehicles will have a limited range and will be dependent on an electric grid or infrastructure not much different from what we have now. Few want more hydroelectric dams or nuclear plants and carbon fuels are about the only… Read more »
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andrea
Guest
0

agreed, hydro fuel cell innovation is much much better and safer, and has a better distribution of “fuel” ( salty water) installed at excisting gas stations ( cheap ). Hydro fuel cell. keep an eye on it!

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ves
Guest
0

that’s why Ballard is the future.

Chet
Guest
0
For millions of years man dreamed of going to the moon. For thousands of years man talked about doing it. For a couple of hundred years he was working on it. A few decades ago he stepped on the moon. For all that time there was an abundance of people would come forward and vehemently point out all the reasons and ways that man would fail at this goal…still, man kept focusing on what was working and leaving behind the failures and all the naysayers. If I’m not mistaken, the leading cause of carbon in our atmosphere comes from the… Read more »
frank_n_steyn
Irregular
143

“For millions of years man dreamed of going to the moon”, more like dreamed of where’s the next meal going to come from.

pieter132
Guest
0

It is never been shown in the press but many scientist are coming out and showing the carbon hoax, invest accordingly

http://humansarefree.com/2017/09/31487-scientists-say-global-warming-is.html

Loy
Guest
0

The Flat Earth Society thinks Tesla is a failure.

dcohn
Irregular
200

Believe they went to the moon huh.

And no other country ever wanted to go. It was just a few trips and then we decided against going anymore.

China went i forgot but no humans or animals.

Van Allen belt that has some enormous radiation that even today they talk about being unable to get past.

How did the tin foil ship protect those people again? What’s the Secret Space Program is not on TV so it must not exist.

https://steemit.com/news/@an0nkn0wledge/the-origins-and-50-years-of-evidence-of-a-secret-space-program

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Loy
Guest
0

What gasoline vehicle doesn’t have limited range? How do you pump gasoline when the grid is down? Distributed generation with renewables is the end of the grid. Negative electric utility rates are the end of utility companies. Have you heard of wind power producing negative electric utility rates? There are search engines where you can look it up. Why would you want fission new culler power plants when there’s free sunshine & wind? I think combustion engines, both internal & external, have hit a wall as unsustainable.

CHARLES F. MOORE
Guest
0

I know a person who has a Tesla. She said they advertise a range of 250 miles on a full charge but driving in the City is about 210 miles. I live in a large City of about 3 million people and she said there is only one Service center for Tesla.

StockMidas
Irregular
246

Spot on with TSLA Travis.

Never thought I will say it about a $57 Billion company but in this instance investing in TSLA is probably a bit of a punt. But the FOMO will probably prevail – Mr Musk is no idiot by any stretch of the imagination and TSLA will continue to attract a large investor basis.

caseydalpal54
Irregular
2

I have traded it with CALLs and PUTs, made a little money but never considered actually owning any shares. I missed out as well. And almost every time I PUT it I should have CALL’ed it … LOL

redbear
Guest
0

TSLA is one you throw some pretty penny and hope 10 years from now, it is where it wanted to be 10 years ago. I did it with a nice list and been handsomely rewarded with amzn, Goog, Aapl, nflx, fb, pcln just to name the obvious. Added TSLA 2 yrs ago, but let’s see 10 years from now.

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Tony
Guest
0

I believe Mampilly is referring to ORA. Check it out.

StockMidas
Irregular
246

Travis is correct on this one – it is TSLA that Paul Mampilly is referring to.

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Loy
Guest
0

Mampilly recommended ORA last year.

RUSS
Guest
0

TRY ORMAT TECH

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Egidio
Guest
0
One of the things that most of us miss out, when trying to analyze a stock like Tesla is, in your face metrics, and then there is faith behind a visionary like Mr. Elon Musk, who believes in the betterment of mankind. The young people,are the future, and as long they have faith in transforming the future to their way of perception, then there will always be a future in company like Tesla. For the betterment of mankind, then L, as a member of the old guard, my hat goes off to a visionary like Mr. Elon Musk who understands… Read more »
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BJI
Guest
0

“betterment of mankind” my sweet patootie! He owns 5 houses in Cal and NONE of them, I think, uses a solar roof or solar panels. His plant in Nevada DOES NOT USE SOLAR PANELS! His EVs are priced out of the reach of those now driving the MANY TENS OF MILLIONS of vehicles in the United States that are MORE THAN 11 YEARS OLD!!!

Loy
Guest
0

He’s a tad busy to re-roof 5 houses on your schedule. His NV plant won’t be completed for years, so take a look at it then. And it could be powered by wind, another renewable. His Model 3 production has hit a snag, but it hasn’t gone the way of Studebaker, Packard, Hudson, Oldsmobile, Kaiser, Dusenberg, Stanley Steamer, Mercury, Whippet, Willys, Fargo, Desoto, Nash, Pierce-Arrow, Edsel, Airflow, Vega, yet. And all of them were priced out of the reach of Greyhound riders.

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pieter132
Irregular
49
Another development which is increasingly pushed by many western governments which if you analyse the energy capacity of electric cars and their performance it really borders at insanity that our so called leaders push for such a wrong direction. you can read the battery technology is still insane poor in 2017. Battery capacity by 2030 is said to be 240Whr/kg. The energy content of propane is 13,900Whr/kg (availabe and guaranteed NOW) – some 58x more energy dense. Even after factoring in losses due to energy change the comparisons are still orders of magnitude different. There is zero reason to move… Read more »
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Random
Irregular
35

Things have moved on a lot in the last 10 years. According to Tony Seba, the cost of solar+battery storage will very soon (next few years) be not only cheaper in most markets than conventional generation, it will be cheaper than electricity distribution costs even if centralised power stations could generate power for free. Worth watching one of his talks https://www.youtube.com/watch?v=2b3ttqYDwF0

aegetswil
Irregular
4

What a great video. Very eye-opening!

Kaypay
Guest
0

What you are missing, Pieter123, is that the Gen xers and millennials do not want to use any type of fossil fuel, I have ten grandkids and everyone of them are far smarter then we of the baby boom generation. At the speed at which technology is advancing it is only a matter of time when EV’s will be able to run many hundreds or thousands of miles per charge. There is a future with out the old IC engine and the world will be better for it.

pieter132
Irregular
49
@ Kaypay the Gen xers and millennials have it completely upside down. Have you every give it a thought what fuel runs the shipping industry globally, the road transport, rail transport many of these companies are selling a fantasy just the reality is different. Just try to run a container ship, truck with batteries they you understand only energy density. In the mean time let the gen xers and millenials dream on their smartphone, time will tell of course. Just a reminder 20% of the electrical power in the usa is powered by nuclear power which power is gonna replace… Read more »
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Loy
Guest
0
All ocean travel & shipping was wind powered for centuries. It will be again, when fossils become too scarce & or too expensive. Expensive is likely to come before scarcity, as negative utility rates (wind powered) have come before we’ve run out of money. New culler power was sold as “too cheap to meter”, but it hasn’t worked out that way at Pripyat, Fukushima & a number of others shutting down & not being replaced. Maybe you could help new culler power by storing spent fuel rods in your backyard swimming pool. They might even pay you a handsome fee… Read more »
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Loy
Guest
0

Thank you!

dcohn
Irregular
200

Brainwashed by today’s curriculum in school to generate business in the planned industries.

We are slaves.

ALFIE
Guest
0

You are completely correct on the energy density. In addition, half of all electricity generated is dissipated as heat. Then the charging of the battery uses half for heat. Then half of the battery usage is heat. this is a lot of losses!

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