Telsa Runs Out of Gas

John Ransom | November 06, 2013 2:36 PM

Welcome to stocks in the news where the headline meets the trendline.

Stock Number One: Tesla Motors, Inc. (SYMBOL: TSLA)

And the headline says Tesla Shares Sink; Analysts Stay Bullish—Wall Street Journal

“Wall Street analysts aren’t fretting much over Tesla Motors Inc.'s steep stock slide on Wednesday,” reports the Journal. “Shares fell sharply even as the electric-car maker’s quarterly results beat analysts’ estimates. The outlook is what spooked investors; Tesla said results for the final three months of the year would be very similar to what took place in the third quarter. Investors were expecting more. Tesla dropped as much as 17% to $146.35 on Wednesday.”

Tesla’s trading 16 times sales, 34 times its a book value, and is still losing money.

While analysts see a path to profitability for Tesla, there’s a long line of car companies that have been down that path before and run out of gas.

And of course as an electric car company Tesla doesn’t even have the kind range that a gas powered car would give them.

Our Ransom Notes Trendline says: Avoid Tesla

TSLA data by YCharts

Stock number two: Ebay (SYMBOL: EBAY)

And the headline says: eBay pushes above its 50 sma last week's peak in recent trade – Briefing.com

EBay has been stuck in a long accumulation phase over the last year. It’s been underperforming the rest of the markets substantially.

Company is currently trading at about 25 times its trailing earnings and about 17 times its forward earnings. It pays no dividend.

Revenue growth is been robust as has earnings growth year-over-year.

But analysts have been revising their estimates downward very slightly.

If you buy the stock under $53 you can probably trade it with support coming in around $50.

“Chesapeake Energy Corp (CHK), the No. 2 U.S. natural gas producer, reported a third-quarter profit on Wednesday, but its shares fell more than 6 percent after it said its oil production would be lower this quarter,” says Reuters. “Chesapeake and other U.S. exploration and production companies are trying increasingly to get more higher-priced crude oil output from shale formations like the Eagle Ford in South Texas as natural gas prices remain depressed.”

I like Chesapeake. They are in the right spaces. Despite some weakness in natural gas prices and recent weakness in oil prices, Chesapeake has a great future.

Expect earnings to accelerate in the coming years.

The company pays 1.3% dividend.

There is no PE because the company lost money in the last 12 months, but analysts expect the company to be profitable in 2014 and they have recently upped their estimates for the year.

Our Ransom Note Trendline says: Buy Chesapeake Energy