Honda Vs. Tesla: Buy Deep Value Or Buy The Future?


  • I’ll present a case study on how Toyota grew profits 22% per annum from 1995 to 2005, but saw its stock grow at just 7% per annum.
  • While EVs have been the cool place to be, Honda’s dominance in the motorcycle market goes unnoticed.
  • Tesla’s profit margins could shrink as cheaper EVs come online.
  • Making a case for intellectual humility, I argue for owning Honda’s deep value over Tesla’s futuristic promise.
Green Energy Vehicles At 2022 Central China International Auto Show

Getty Images/Getty Images News

The Thesis

Tesla’s (NASDAQ:TSLA) stock is up 600% over the past five years, while Honda’s (NYSE:HMC) stock is down 33%. Going forward, I see a changing of the tides. In the decade ahead, I project total returns of 5% per annum for

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in HMC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article includes base-case scenario estimates, using known facts and economic projections. The future is uncertain, and investors must draw their own conclusions.

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