Can Elon Musk's other big project, SolarCity, transform the power industry the way Tesla is transforming autos?
Two words made a lot of investors very rich in 2013: Elon Musk.
The 42-year old engineer and entrepreneur saw two of his publicly traded companies – Tesla and SolarCity, a company he founded with his cousins, the Rive brothers – nearly quintuple in price over the last year. While Tesla seeks to transform automobiles with its high-end electric-powered luxury vehicles, SolarCity is trying to revolutionize the $5 billion solar industry with its leasing and energy purchasing model. Consumers lease panels installed by SolarCity; the company gets a tax credit to go along with the leasing revenues. In exchange, the customer gets the energy from the panels.
(Read more: Solar power craze on Wall St. propels start-up)
But, like Tesla, SolarCity isn't turning a profit. Over the last four reported quarters, the company lost $64.7 million dollars. Still, the company is now worth nearly $5.4 billion and Musk says the stock is undervalued.
John Stephenson, portfolio manager at First Asset Investment Management, believes the stock's run is just beginning.
"It's certainly been incredible," says Stephenson. "I think it's going to continue to brighten up your portfolio and continue to run. I see this stock being north of $100 a share in over a year and the reason in growth."
Stephenson notes that the company's growth rates exceed its competitors and he believes the company's leasing model is responsible for $42 per share of the stock's value. As well, he is a fan of SolarCity's use of asset-backed notes to lower the company's borrowing costs and growing operating margins.
"Its operating costs have dropped from 80 cents a watt to 60 cents, a dramatic breakthrough," says Stephenson. "Overall, it's the fastest-growing solar stock out there and I think that's why it deserves to continue to trade well."
Jeff Tomasulo, Managing Partner of Belpointe Alternative Investments, says the technicals reflect Stephenson's bullishness.
"When you're looking at this chart, it's like the industry: very volatile," says Tomauslo. "But, the one thing that you can see in the chart is it's in a great upward trend."
Tomasulo believes that if the stock breaks below $50 per share, investors should be worried. But, so long as it holds above $60 per share, he believes it could be a buy.
"The price is showing to me that it's very bullish right now," says Tomasulo. "You want to see it very stable above $60, though."
To see more of Stephenson and Tomasulo analyze SolarCity, watch the video above.
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