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Here's why you want to avoid Tesla

Lawrence Lewitinn
Talking Numbers

After plunging on earnings, everyone's favorite momentum stock is now back above a critical level.

Of course, we're talking about Tesla, which finally broke above the $200 level on Thursday after three weeks in the doghouse.

Earlier in the month, shares in the electric automaker dropped as low as $178, the lowest price since early February. There's no need to weep too much for Tesla investors, though. Even at this month's lows, the stock was still up 18 percent on the year. Now Tesla shareholders have made 33 percent year to date.

So with Tesla shares just a few dollars shy of analysts' average target price of $214, will the stock run out of gas (or, in this case, electricity)?

(Watch: Jim Chanos: Best shorts in a bull market)

Steven Pytlar, chief equity strategist at Prime Executions, believes Tesla's stock will trade sideways for a while. To be sure, he sees the technicals as showing a few positive signs. "Even though it gapped lower on earnings recently," said Pytlar, "it has just rallied back very easily. That tells us there's probably not a lot of selling pressure left in the stock."

Pytlar even thinks the stock can move up to a key resistance level at $230. "But, as it stands right now, a lot of the longer-term indicators are starting to move more towards neutral levels. That usually signals that a longer-term consolidation phase is probably going to play out."

"It's technical speak for 'choppy and sideways,'" said Pytlar.

The fundamentals suggest cautious investors should stay away from Tesla, according to portfolio manager Chad Morganlander of Stifel Nicolaus’ Washington Crossing Advisors.

"It is a great company; innovative and the cars are beautiful," he said. "The problem is that the valuation is way ahead of itself."

Tesla's stock is currently trading at 62.5 times its estimated 2015 earnings. "This is an auto company," said Morganlander. "This is not a software company. It's not Google, where it's going to have operating margins of 30 to 35 percent. It's going to have operating margins [if it's] lucky of 15 percent when it hits maturity."

(Read: Fiat Chrysler CEO: Please don't buy Fiat 500e electric car)

There may be those who want to trade the stock in the short term. But for those looking for a long-term investment, Morganlander thinks they should avoid Tesla.

"For more aggressive traders, perhaps you want to play around with it," he added. "But, from a fundamental perspective and a valuation perspective, I would just be much more conservative with it."

To see the full discussion on Tesla, with Pytlar on the technicals and Morganlander on the fundamentals, watch the above video.

[Disclosure:Stifel makes a market in the securities of Tesla Motors.]