Last Updated on September 2, 2020 by Henry John
Tesla is one of the biggest surprises and winners of a pandemic rocked stock market along with the likes of Zoom, Apple, and Amazon.
Many stock investors who downplayed Tesla, shorted the stock or ignored it, are bitting their fingers in regret right now. Everybody now wished he owned as many Tesla shares as possible before the year began.
There has been a lot of doubts around Tesla, is it going to crash or continue to rise many wonders. Nonetheless, one thing is clear (free from doubt) Tesla is a great stock for this year’s market; a great stock to own before the year.
If you are a Tesla stock lover looking for other great stocks like Tesla, here are my top picks:
There are five major criteria used in selecting these stocks that have the potential to keep growing like Telsa, and these criteria are that the companies:
- have lots of room to grow in the next five years
- have the Best Product in the Market
- have a Dominating market position
- have great executives
- are loved by investors
Here are the top stocks/companies like Tesla to invest in and expect a Tesla-like growth:
1. Zoom Video Communications Inc (NASDAQ: ZM)
Zoom’s similarities with Tesla: It ticks all the boxes
- Has the best product in the market
- Commanding market position
- Can grow significantly in a post-COVID world with lots of room to grow
- The company is loved by users and investors
- A great management team, especially the CEO, Eric Yaun (who I can liken to Elon Musk in many ways)
Zoom’s stock jumped by 41% in a single day and has grown over 650% YTD (and Tesla’s stock has grown over 550% YTD). For a stock to make such a move without a short squeeze (even with a short squeeze) is simply, Mindblowing!
With the kind of crazy moves we’ve seen in the market this year, well, anything is possible. This move Zoom made (jumping by 41% in a single day) is a Tesla like move (something we won’t be surprised seeing with Tesla).
On the competition front, Zoom has lots of competitors, and I did note that it has a dominating position in its market.
But wait a minute!
Zoom’s product is competing with products from the likes of Alphabet, Microsoft, and Cisco.
How on this earth can it dominate like Tesla?
Zoom is the Master of the Video Conferencing World (a Niche King) and its founder (Eric Yaun) left Cisco to start Zoom because he thinks Cisco’s product sucks (and it sucks for real). While its major competitors are Jacks of all trades with inferior products, Zoom is a ‘master of one’ with a superior product.
Three years ago, in response to the competition in the video conferencing space, Zoom CEO, Eric Yaun told Forbes:
“It’s extremely crowded, but the potential is huge. If our product is better than any others, we can survive.”
The company is getting itself into the position Google Search is in the Search Engine Market; you can have Bing, Duckduckgo, and Yandex Search, but Google Search is still the go-to search engine for most users. Like Uber and Google, Zoom is now a verb.
Zoom is the go-to tool for video conferencing (a market valued at $3.85 billion in 2019) and is well-positioned to dominate the entire corporate video communication market.
2. Amazon.com, Inc (NASDAQ: AMZN)
Amazon’s similarities with Tesla: It ticks all the boxes + reduced risk
- The leader in its two major markets (eCommerce and Cloud Computing Services)
- In existing and new markets with lots of room to grow
- Has the best product in its major markets
- A great and experienced management team
- Loved by users because it puts them first and by investors because it never stops growing
Amazon is a slightly different beast from Tesla, in many ways, it is what Tesla aims to be in the next couple of years. However, it still has similar growth trajectory as Tesla.
Most of the excitement around Tesla lays in its potential to dominate future markets especially the self-driving and battery market, aside from its primary driver (electric vehicles). Amazon creates similar excitement in the Street, albeit, not loudly announced as Tesla’s.
Let’s crunch some numbers one bite after another.
The global battery market size was valued at USD 108.4 billion in 2019 and is expected to grow at a CAGR of 14.1% from 2020 to 2027.
On the other hand, the global cloud computing market size was valued at USD 266 billion in 2019 and is expected to grow at a CAGR of 14.9% from 2020 to 2027.
There is a similar growth trajectory for the battery and cloud computing market where Tesla and Amazon respectively, are expected to get future gains from.
On Friday, 26th June 2020, Amazon announced that it has reached an agreement to buy autonomous ride-hailing startup Zoox, having previously invested in Aurora (another self-driving company), putting it on the map for a commanding position in the future strong self-driving market.
Like Tesla, Amazon is swimming deeply in the ocean of self-driving technology and this puts the two companies’ futures against each other.
In fact, the CEOs of Tesla and Amazon, Elon Musk (CEO of SpaceX) and Jeff Bezos (CEO of Blue Origin) respectively, are already rivals in the Space industry and it would be interesting to see them go toe to toe again in the future self-driving market.
Nonetheless, the future self-driving market will be big enough for five companies the size of Tesla to fit in and have their plates reasonably filled.
Amazon’s advantage is the fact that it has created great products that have dominated their respective markets. Their management team knows exactly how to dominate new markets and generate huge returns that pushes stock prices through the roof.