With everyone talking about Tesla's (TSLA 12.06%) three-for-one stock split, and considering the stock's sharp move higher since the beginning of July, the electric-car maker's shares may be catching many investors' attention. Is now a good time to buy this growth stock? Or have the fast-growing company's shares already priced in best-case scenarios?

While it's true that Tesla stock trades at an expensive price tag, it may be more deserved than some investors realize. Indeed, the valuation looks quite reasonable next to the company's attractive combination of a healthy balance sheet, pent-up demand for its vehicles, and soaring revenue. Yes, measured by traditional valuation metrics like price-to-earnings and price-to-sales, Tesla shares look expensive on the surface. But the stock trades at such a steep premium for a reason.

Let's take a closer look.

Strong fundamentals

It would be difficult to overstate how attractive Tesla's fundamentals are. Consider its war chest of cash. The company's balance sheet boasts $18.3 billion of cash and cash equivalents. Trailing-12-month free cash flow is also impressive, at close to $7 billion. That's up from about $5 billion in 2021 and just $2.7 billion in 2020. 

The company's sales are also soaring. Trailing-12-month revenue is $67 billion, up from about $54 billion in 2021 and close to $32 billion in 2020. And management expects strong growth to persist. Indeed, management has repeatedly guided for production and unit deliveries to increase at an average rate of about 50% annually for the foreseeable future. And with delivery windows for new Tesla orders on the company's website pushed out to as late as April of next year for some models, demand certainly remains robust -- an indication that Tesla management isn't bluffing about its sales growth expectations. 

A huge addressable market

It's also worth noting that even though Tesla has already achieved a significant annual revenue level, it could be argued that the automaker is still just getting started. Tesla management has always viewed the market for gas vehicles as its addressable market -- not the niche market for electric and hybrid vehicles. And given the way essentially every major auto manufacturer is now leaning into electric vehicles with heavy investments, this view of Tesla's addressable market is looking truer than ever.

Just how big is the market for cars? In 2022 -- a year that new car sales have been hampered by global supply chain challenges -- global vehicle sales are estimated to be about 80.8 million, according to estimates by J.D. Power. Showing just how much room Tesla has to grow, the company's 2021 unit deliveries were under one million units.

Better yet, Tesla CEO Elon Musk said in the company's most recent annual shareholder meeting that when new car makers ramp up their advertising for their electric vehicles, it actually helps demand for Tesla's vehicles. Electric vehicles are still so early in their adoption that lack of awareness may be the primary factor holding sales back.

And then, of course, there's the potential for Tesla's fast-growing energy business. Musk has said that he thinks its energy business could eventually rival its automotive business.

Time to buy?

So is Tesla worth its price-to-earnings multiple of about 110 at the time of this writing? While shares may not be a bargain at this level, they may still be priced reasonably enough for investors to consider adding the stock to their portfolio as a small position relative to their overall portfolio value.