The superhighway that Tesla Motors, Inc. (NASDAQ/TSLA) is building across the United States appears to be taking shape with consumers and investors.

The maker of the quick-charge electric-battery vehicle has recovered since taking a hit on growth and valuation concerns. The stock is still not cheap, but based on what is developing and its longer-term prospects, a stock like Tesla may be worth a closer look as an investment opportunity.

Back in April, I suggested picking up some shares of Tesla as an investment opportunity at a price tag of $193.00. The stock closed at $253.00 last Wednesday, representing a hefty quick gain of 28%.

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Now after reporting a decent quarter, Tesla has been receiving kudos from Wall Street. Brad Erickson at Pacific Crest issued an Outperform rating and assigned a price target of $316.00. This price is high, given the stock is already trading at 80-times (X) its 2015 earnings per share (EPS) and an extremely high price-to-earnings growth (PEG) ratio of 5.34. For Internet and social media stocks, the valuation likely wouldn't be given a second look, but for an automaker, there clearly are some heads shaking.

While I continue to like Tesla as an investment opportunity, I would be more likely to accumulate shares on price weakness than to chase the stock price higher.

In my view, Tesla needs to produce more unit sales of its vehicles in order to reduce the fixed overhead charges per vehicle made, thereby pushing up the operating margins.

We are seeing Tesla vehicle sales steadily rise, but the numbers still pale in comparison to the major automakers, based on my stock analysis. In the second quarter, the company sold a mere 7,579 Tesla "S" models. Yet the company is comfortable with its aggressive expansion in China and Europe, where gasoline prices are sky-high compared to what we pay domestically. For Tesla, this is an investment opportunity.

In Europe, there are currently 14 charge stations that connect the Netherlands, Germany, Switzerland, and Austria, which offers the company a further investment opportunity.

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By MiLu24

But where I see the most potential for Tesla will be its ability to expand in the highly lucrative China auto market, which is the largest in the world and a top investment opportunity.

What you have in China is also a concerted move towards controlling pollution, which has become a major problem across China's super-cities. The government has been imposing taxes on vehicles and controlling how many can be bought in order to rein in the pollution issues. China has already been offering subsidies to fuel-efficient vehicles, so the idea of selling fuel-free Tesla vehicles could be a big winner in this massive country, which could make the stock a good longer-term investment opportunity.

The investment opportunity in China will likely be a game-changer for Tesla if it can execute and if the Chinese authorities support the concept. As part of its strategy, Tesla is also planning to build the Tesla S model in China, which is a strategy also pursued by the major automakers.

At this time, there are "Supercharger" stations in the smog-stricken megacities of Beijing and Shanghai, and the company is planning on extensive coverage in China.

The bottom line: if Tesla can succeed in China, the stock price could easily double within a few years, making the stock a higher-risk investment opportunity.

This article China a Game-Changer for This U.S. Automaker was originally published at Daily Gains Letter.

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