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Recon Capital CIO: Investing In Tesla Is 'An Investment In Elon Musk;' Be 'Cautious' Going Into FOMC Hike

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Recon Capital CIO: Investing In Tesla Is 'An Investment In Elon Musk;' Be 'Cautious' Going Into FOMC Hike

Kevin Kelly was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday–Friday at 8 a.m. ET here.

'Cautious' On Tesla

Recon Capital Chief Investment Officer Kevin Kelly warned that investors should be "cautious" on Tesla Motors Inc (NASDAQ: TSLA), particularly if they share his view that there may be a slight contraction in overall equity markets.

The same is true, Kelly suggested, for all "high-beta names." A high-beta stock is one that is more volatile compared with the overall market.

Related Link: What To Take Away From Tesla's Shareholders' Meeting

Investing In Tesla Is Investing In Musk

Kelly said that Tesla "doesn't trade on fundamentals," arguing that an investment is really an investment in Elon Musk, "who has been brilliant." In addition, the company has a "cult-like following" as a result of the "great cars" and high safety rating, Kelly added.

Given where the market may be going into the Federal Reserve meetings this fall, Kelly said he recommends traders "be cautious on a highly-levered name like Tesla."

Other Recommendations

Instead, Kelly prefers German auto manufacturers, including Daimler AG (OTC: DDAIF), Volkswagen AG (ADR) (OTC: VLKAY) and BAYERISCHE MOTOREN W (OTC: BAMXY). Kelly pointed to last month's sales as evidence that the German manufacturers might outperform U.S. manufacturers moving forward.

As for the U.S. manufacturers, Kelly said that U.S. dollar strength may stymie growth. He said that General Motors Company (NYSE: GM), in particular, has "some overhang."

Tesla is down 2.25 percent on Wednesday. The name has, however, gained 12.4 percent year-to-date.


Image Credit: Public Domain

 

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