Scottish Mortgage shares: a once-in-a-decade opportunity to get rich?
Do you ever look back at the stock market’s big multi-baggers and think “If only…“? I do it all the time. Here’s how Scottish Mortgage Investment Trust (LSE: SMT) shares might give us a new chance to get in cheap.
I’m thinking about Amazon.com, priced today at hundreds of times its initial public offering price. Those who saw its early-mover potential knew what they were buying. Investors became millionaires from Amazon stock.
Tesla did something similar. It’s another of the big tech-stock growth winners of the 21st century. Car makers are all turning to electric vehicles. But Tesla was a pioneer, and it developed the technology that all the rest are using now.
Then there’s Moderna, given a massive boost by its Covid virus vaccine development. At its peak in 2021, Moderna stock had soared more than 20-fold in just two years.
There are plenty of other examples, including genome researcher Illumina, microchip technologist ASML… the list goes on.
Wouldn’t we all love a second opportunity to buy some of the big winners we’ve missed? Maybe they won’t repeat their early enormous gains. But I think these companies can still generate big riches for their shareholders.
As well as being big growth stocks, what else do these companies have in common? Yes, their prices have all slumped recently.
Amazon stock has fallen 45% from its peak. Tesla is down more than 50%. And Moderna has lost 66% of its value. They’re not back to where they were 10 years ago. But earnings have climbed since then. And I now think that, overall, they might be close to the best value they’ve been in a decade.
A new bullish decade?
When world economies pull themselves out of the current slump, I reckon we could see a new bull run for these depressed growth stocks.
And if it’s the start of a new upwards decade, it could be a great time to buy Scottish Mortgage Investment Trust shares. What’s Scottish Mortgage got to do with it? Well, the trust holds all of these big American growth stocks, and more.
And if that’s not enough, it currently trades on a hefty discount. That means the share price is actually lower than the value of the holdings it represents.
There’s some risk, for sure. But risk and reward come hand in hand, right? And those who make the biggest investment profits are often those not scared of risk. I do think this is only an investment for those who research the stocks in question and are happy with the risk.
But Scottish Mortgage shares are currently on a 17% discount. That means we can buy a whole bunch of US growth stocks at today’s lower valuations… and then get an extra 17% off.
Oh, and in bullish times, investment trusts often trade on a premium to the value of the assets they hold. So in another 10 years, we might even pocket a bit extra from that too.
The post Scottish Mortgage shares: a once-in-a-decade opportunity to get rich? appeared first on The Motley Fool UK.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Alan Oscroft has positions in Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended ASML, Amazon.com, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2023