If you’re a Tesla (NASDAQ:TSLA) investor and have benefited from its recent share price surge after it announced second-quarter deliveries, it may be time to look elsewhere. Currently, we think Amphenol (NYSE:APH) — a company that makes electronic and fiber optic connectors — and Vertiv Holdings (NYSE:VRT) — a company that provides critical infrastructure and services to data centers — are more attractive buys than Tesla.

Why? Simply because the valuation and growth numbers tell us so. Amphenol and Vertiv stocks have both posted higher revenue and operating profit growth than Tesla over the last twelve months and the last quarter. In addition, they are both cheaper than Tesla.

In fact, the strategy of thoughtfully shifting allocation to more attractive stocks is part of our market-beating performance of the Trefis High Quality Portfolio (HQ), which easily beat the S&P 500 in 2023. despite being significantly underweight the glorious 7 Full HQ Performance History Here.

Better Buys Than TSLA – APH & VRT

To illustrate the opportunity for Amphenol, you pay $27.93 per dollar of earnings before interest and taxes (EBIT) for APH stock versus $95.29 for TSLA and get higher annual growth (6.6% versus 1.4%), higher quarterly growth (18% versus 2.3%), and higher margin expansion (0.5% versus -5.9%). Overall, you get higher revenue and operating profit growth from Amphenol and Vertiv and pay less than you would for Tesla stock.

So what’s the catch?

Now, could Tesla buck the trend? Could the company grow its revenue and profits much faster than Amphenol or Vertiv in the coming quarters? Of course, it’s possible. Especially given the launch of the Cybertruck (which focused on the more expensive $100,000 model after Tesla discontinued the low-end model), the highly anticipated Tesla Robotaxi update in late 2024, and the constant stream of positive news from Tesla’s energy storage and solar businesses (energy and storage revenues increased 2x year-over-year in Q2). Still, Amphenol (>200% return in 5 years) and Vertiv (>600% return in 5 years) are no laggards.

The data below shows that both Amphenol and Vertiv have outperformed Tesla recently and over the past year. This could happen again.

Related Ideas: Better Buys and Outperformers

Pay less per dollar of earnings (EBIT) than Tesla to achieve more sales and profit growth?

^{Note: PEBIT = Market capitalization / Operating profit for the last 12 months | LTM = Last 12 months (last 4 quarters)}

What about relative market returns?

There are signs of a market return, as APH stock has returned 26.3% and 55.7% over the past 6 and 12 months, respectively, which is higher than the 11.5% and 0.3% for TSLA. While the past 3 months tell a different story, much of it was triggered by a single event – Tesla’s Q2 deliveries update. The point is that Tesla stock is lagging.

What did these metrics look like a year ago – could the combination of higher valuation and lower growth at TSLA persist?

TSLA was still valued higher at $66.85 compared to APH at $10.06, but it also had higher annual growth (40% vs. 5.3%) and higher quarterly growth (47.2% vs. -2.6%), but a less favorable margin change (-2.7% vs. 0.4%). Now the situation looks completely different, which means that the market return could shift in favor of APH and VRT.

Additional reference figures and investment theses for APH & VRT

While Tesla stock is seen as a speculation on electric vehicles, sustainable energy, and artificial intelligence, APH and VRT are also benefiting from several hot trends. Amphenol competes in highly specialized areas such as connectors and has focused on increasing its capabilities through a steady stream of acquisitions. Amphenol has acquired over 50 companies in the last decade and has a solid reputation for cost management, which has led to increased margins. The company should benefit from themes such as industrial automation, electric vehicles, and increasing broadband deployment. On the other hand, Vertiv should benefit from the rise of cloud computing as well as the boom in generative artificial intelligence. The company offers solutions such as energy management and storage, thermal management, server rack systems, and operational stacks that are critical for deploying large-scale data center infrastructures.

^{Note: PS = Market capitalization / Sales of the last 12 months}

Here you can find more information about Trefis’ market-beating portfolios, including HQ with downward protection.