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A lot FTSE 100 The components seem cheap as chips right now. But one in particular catches my attention: Scottish Mortgage Investment Trust (LSE: SMT).
I feel like it gets a little overlooked. It has been around for a long time, but after a price increase during the pandemic period starting in 2020, it has fallen out of the spotlight. Today, investors can pick up a share of the Baillie Gifford fund for just £8.12. That's some way off its all-time high of £15.29, which it reached in November 2021.
But I think Scottish Mortgage could be about to make a comeback. I think investors should consider buying some shares today at their reduced price.
Gaining momentum
While its stock still seems like a bargain to me, it's not as cheap as it was a year ago. During that time, they have risen 28.1%. The stock has been gaining momentum. There are a few reasons for this.
First, markets are starting to prepare for interest rate cuts. Inflation has been falling steadily over the past 12 months. While we have experienced some ups and downs recently, I still expect the base rate to drop at some point this year.
On top of that, some of the trust's larger holdings have performed extremely well over the past year. In this sense, the price of its shares has been boosted.
Cheap as chips
But even so, I think escrow still looks like one of the best deals out there today. After all, it is trading at a 9.1% discount to its net asset value. That means I can buy high-quality names like Modern, amazon,and Spotifyjust a few of the 99 companies the trust owns, all for less than the market price.
Of course, more than a quarter of his portfolio holdings are private companies. Valuations for these companies are often difficult to determine. If they go public, their valuations could be lowered.
Exciting times ahead
But on the other hand, there is also the possibility that they will increase. And with Scottish Mortgage's successful stock picking track record, I have faith in management's investment decisions.
For example, you bought shares of tesla in 2013, which has proven to be an incredibly fruitful investment. Scottish Mortgage first invested in NVIDIA in June 2016. Since then, the stock has risen a whopping 6,497.4%.
The trust focuses a lot on artificial intelligence (ai) and that excites me. The ai industry is currently worth around $200 billion but is expected to rise to more than $1.8 trillion by 2030. This is a huge market that I believe Scottish Mortgage can tap into.
It fits me perfectly
However, this type of investment strategy can be very risky. Investing in growth stocks doesn't always pay off and I expect bouts of volatility when investing in this one.
But as someone with a multi-decade investment horizon and a high risk tolerance, the trust strategy suits me very well.
If I had cash to invest today, I'd rush to buy some Scottish Mortgage shares.
