I have, and regularly update, a list of what I consider are the best stocks to buy now. This is made up of stocks that reside across the FTSE index and beyond. Here is one of my picks from the FTSE 100 section of my list for 2021 and beyond.
FTSE 100 best stocks to buy now #1
Scottish Mortgage Investment Trust (LSE:SMT) has absolutely nothing to do with mortgages, nor is it limited to Scotland. It is a publicly traded investment trust that invests globally. It looks for strong businesses with above-average returns with no constraints as to geography, industry, or sector.
2020 was a great year for SMT and I believe it could have an equally good 2021 if not better. The SMT share price increased by nearly 115% in 2020. It is currently trading close to 1250p per share as I write and its price is at an all-time high. SMT’s share price has increased over 270% over the past four years.
Three reasons why I’m a fan
There are three key reasons why SMT is on my FTSE 100 best stocks to buy now list. Firstly, it is run by seasoned investment duo James Anderson and Tom Slater. The duo have been with Baillie Gifford, the Edinburgh-based asset manager behind the trust, for a long time. In simple terms, investors are paying for the wealth of experience these two bring to the table.
Next, SMT has performed well over a long period, which I believe is a testament to the experienced team behind it. We all know that past performance doesn’t guarantee future performance. But I think it shows flexibility and adaptability in differing market conditions, which is reassuring and encouraging.
Finally, SMT has an emphasis on technology stocks within its portfolio. I am an advocate of tech stocks. FTSE technology stocks have become defensive in recent times, especially in 2020 with the Covid-19 pandemic changing the way we live and work and communicate. Almost 10% of SMT’s portfolio is made up of Tesla, which is another of my best stocks to buy now away from the UK market. Other blue-chip technology stocks that are part of SMT’s portfolio include Amazon, Alibaba, Lyft Inc, Netflix, and more.
Risk and reward
There are risks involved in any investment, including SMT. Its share price is at an all-time high and may not move up further as market conditions potentially begin to normalise. In addition, SMT holds substantial amounts of shares in stocks that are considered to be in a ‘bubble.’ This means activity and performance can shoot upwards in the short-term but slow down and stagnate in the long term, so there is a risk of that too.
SMT looks to add value over five-year time frames, preferably much longer. It has performed brilliantly in 2020 and I believe it will continue that trend in 2021 and beyond. I added it to my best stocks to buy now list for the reasons mentioned earlier and there are many positives to it. I believe investing into an investment trust protects my money as it spread across a diverse range of stocks. Away from investment trusts, here is another of my best stocks to buy now from the FTSE 100.
Jabran Khan has no position in any of the shares mentioned. 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.