Apple vs Tesla: Which Stock Will Offer a Better Return Over the Next 52 Weeks?

The question of whether Apple (AAPL) or Tesla (TSLA) shares will offer a better return over the next 52 weeks is a complex one, influenced by various factors. Both companies have seen significant growth, but recent trends and market conditions suggest that Tesla may have more potential for return in the coming year.

Apple Stock: Stability and Growth Plateau

Apple's stock is considered stable, reflecting its established position in the market and the consistent demand for its products. However, growth in AAPL is slowing, which poses a challenge for maintaining significant returns in the short to medium term. Apple's most recent iPhone release, rollout of 5G networks, and new product/service mix, including the latest iWatch and Apple Fitness , are expected to contribute to its future growth. However, these factors alone may not be enough to propel Apple to impressive returns in the next 12 months.

Tesla Stock: Speculative and Valuation Concerns

Tesla, on the other hand, is more speculative and faces significant challenges in terms of valuation. Recent analysis suggests that Tesla's stock price has become highly overvalued relative to its actual profitability and cash flow. The EV market is crowded with powerful competitors offering superior or equal electric vehicles, putting pressure on Tesla's market share.

Tesla's current market capitalization of around 400 billion is driven by investors who mistakenly believe in the company's future growth. The Price/Earnings (P/E) ratio of Tesla is an astounding 1085, indicating that investors are paying significantly more than the earnings justify. Tesla's profits, while advertised, are distorted by the sale of regulatory emissions credits, which actually result in a substantial loss once these credits are factored in.

Upside Potential for Tesla

Despite these challenges, Tesla's stock still offers more upside potential due to the predictability of its third-quarter profitability. Any significant positive surprise in profitability could add substantial value to the stock. Moreover, increased deliveries, the commencement of the Berlin factory, and other strategic initiatives are expected to drive Tesla’s future growth and profitability.

Projected Returns for Both Shares

Based on the current valuation and expected performance, I project Apple (AAPL) to reach a target of 175 in the next 12 months, starting from the current CMP of 114. This suggests a potential return of around 53%, which we will round to 50%. For Tesla (TSLA), the target is projected to be around 670 in the next year, starting from the current CMP of 420. This translates to a potential return of around 59%, which we will round to 60%.

While Apple's growth is slowing and may require significant positive surprises to match Tesla's potential returns, Tesla's current valuation and strategic initiatives suggest that it may offer a better return over the next 12 months.

Conclusion

Both Apple and Tesla are significant players in the technology and automotive sectors. While Apple's stability and existing product pipeline provide a solid foundation for future performance, Tesla's speculative valuation and market competition pose challenges. However, the potential for significant returns and strategic initiatives may tip the balance in Tesla's favor over the next 52 weeks.

It is important for investors to closely monitor market trends and company performance, using tools like stock analysis and expert opinions to make informed decisions.