The suddenly hot IPO market is about to get a little bit hotter with this week's Tesla Motors.
It's a great story stock, but my "Call-to-Action" is a little less enthusiastic: rent, but don't buy Tesla for the long-term.
If you can get in on the current expected price ($14 to $16), I'd say you have about four bucks to the upside. Then, I think you should sell.
But first, here are five reasons to buy:
1. It's a Green Tech story. These energy-conscious companies have fared well this year and continue to attract portfolio managers' interest.
2. There's a deal with Toyota to buy Tesla's Fremont, Calif. plant with the intention of reinvesting $50 million into Tesla for a 2.5 percent stake. This is exactly the kind of validation of valuation that portfolio managers favor.
3. Despite strong early buzz, the $14-$16 price range seems to be sticking with underwriters. This leaves room for a possible jump after the deal prices.
4. GM and Chrysler are still out of the public equity markets. Toyota, the former "closet-index" favorite, remains under a cloud of dust. There is room for the "closet indexers" to add an auto stock to their portfolios.
Take Tesla for a spin, but don't get greedy and hold it past a nice profit should it rise.
The company is still printing losses, and the current market potential of Green Tech stocks still makes Tesla a niche player. Maintain a strong sell discipline here.
This Green Tech automobile IPO makes sense for a quick ride.
- Tesla Motors Raises Target for IPO
- Toyota Aims to Open U.S. Plant in 2011
- Tesla Aims for $185 Million in First Offering
- Phil Lebeau's 'Behind the Wheel' Blog
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
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