If I had £5K to invest right now, two growth stocks I’d love to snap up are The Renewables Infrastructure Group (LSE: TRIG) and Scottish Mortgage Investment Trust (LSE: SMT).
Here’s why I like these two picks.
A greener future ahead?
Renewables Infrastructure is set up as an investment trust. It owns many assets throughout Europe to harness these renewable options, and make money from them. Due to its make-up, a big part of its modus operandi is to deliver stellar shareholder value.
For me, the stock possesses two primary bullish aspects. Firstly, the positive sentiment, including government-backing across the developed world, to move towards green energy could bode well for Renewables Infrastructure, its earnings, and returns.
Next, the business is looking to ensure its investors are rewarded. For example, at present, the shares provide a dividend yield of over 7%. To provide some context, the FTSE 100 average is 3.8%. Although I understand dividends are never guaranteed, as the world relies more on greener alternatives, this could grow.
Despite my bullish stance, there are a couple of risks to be wary of that could impact growth and returns. Firstly, higher interest rates could hamper growth and earnings. This is because debt usually funds new assets, and is costlier during times of higher rates. The other issue is that setting up solar and wind farms, and maintaining them, isn’t an easy or cheap endeavour. This could hinder returns and slow growth.
Overall I reckon tapping into the renewable energy market at this stage could be a savvy move.
Covering all bases
Another investment trust I like the look of is Scottish Mortgage. This pick is a bit different compared to Renewables Infrastructure as Scottish invests in different growth stocks across the globe.
The business has a track record of seeking out high-growth opportunities, and sticking with them, even when others can’t see the value. A great example of this is when the trust invested in Tesla, when many others were hesitant. It paid off nicely later down the line. However, I do understand that past performance is never a guarantee of the future.
Moving on, the diversification that Scottish shares offer is a plus point for me. Diversification is a great way to mitigate risk.
It is worth noting that there are a couple of challenges that come with Scottish Mortgage shares too. For example, the firm holds positions in unlisted firms, which means valuations can be skewed. After all, the stock market can’t value unlisted businesses. Plus, sometimes, these firms may not make it to the market or end up falling by the wayside. In turn, performance and returns could be hurt.
Overall, Scottish Mortgage has a great track record of performance and investor returns. It also has positions in some of the most exciting growth stocks around. These include Nvidia and Amazon, to name a couple. For long-term investing and growth, I see Scottish Mortgage as a no-brainer for me.
