Shares of Electric Vehicle (EV) maker Tesla (TSLA -1.92%) are up close to 50% this year. That means a $5,000 investment made on Dec. 30, 2022, would already have grown to $7,300 today.
Yet, as is often the case with Tesla, there's no shortage of bearish sentiment. Recent delivery figures and another round of price cuts have some analysts souring on the company's prospects.
Nevertheless, I'm loading up on Tesla shares right now. Here's why.
Tesla has the competition changing its tactics
Building EVs is hard. It took Tesla years to perfect its designs and build the factories that are now powering its swelling production figures. Meanwhile, its competitors continue to go back to the drawing board.
Consider what's happening at Toyota Motor -- the largest automaker in the world based on production. Toyota has a new Chief Executive Officer, Koji Sato, who has decided his company needs to do a better job of competing with Tesla -- by emulating Tesla's formula.
Toyota will look to revamp its factories to focus on EV production, helping to reduce costs and improve margins. At the moment, Toyota produces EVs, hybrids, and gasoline-fueled vehicles all on the same assembly line. And that's part of why Tesla makes almost eight times per vehicle compared to Toyota.
Even if Toyota's new plan works, it will take years and billions of dollars. In the meantime, Tesla will continue to stretch its lead in the EV race.
Tesla is a cash cow in the making
You could be forgiven for not thinking of Tesla as a cash cow. After all, the company was unprofitable up until 2020. However, things have changed quickly for Tesla as its net income has grown by leaps and bounds.
TSLA Net Income (TTM) data by YCharts.
Tesla now ranks as the 32nd most profitable American company (by net income). That puts it ahead of iconic corporate titans like McDonald's, Coca-Cola, Caterpillar, and American Express.
Similarly, Tesla's free cash flow has shot up from $0 to $7.5 billion in less than four years. Since the company pays no dividends and has no current share repurchase program, Tesla has amassed an impressive cash balance of $16.3 billion.
TSLA Free Cash Flow data by YCharts.
With all that cash on hand, it's no surprise that Tesla management has hinted that a buyback program is on the table this year.
Is Tesla a buy now?
In summary, my decision to buy more Tesla shares is a no-brainer. The company is the indisputable leader when it comes to EVs. In addition, Tesla's profitability and cash flow should lead to considerable shareholder returns once the company's management approves a stock buyback or a dividend.
