It’s been a turbulent few years for Rolls-Royce (LSE: RR) shares. The business has struggled in recent times as we’ve lurched from crisis to crisis. The stock took a massive tumble as the Covid-19 pandemic hit. Since then, it hasn’t really recovered.

This is largely due to the current macroeconomic environment. Stocks from a variety of industries have found themselves struggling this year as inflation and the Russia-Ukraine conflict have seen investors lose confidence in the market. This year alone, Rolls-Royce stock is down nearly 40%.

However, at their current price, Rolls-Royce shares look cheap. So, should I be rushing to add the FTSE 100 firm to my portfolio?

Rolls-Royce positives

Well, there are a few tempting factors for me.

Firstly, the business is heavily reliant on a flourishing aviation sector because it sells and services engines. This is the reason it took such a hit during the pandemic. However, with international travel edging ever closer to pre-pandemic levels, this should hopefully provide a boost for the firm going forward.

Elsewhere, Rolls-Royce is also set to benefit from an increased focus on defence spending. Its defence division is its second-largest revenue generator. And as the conflict in Ukraine has seen many countries across Europe place a greater emphasis on security, Rolls-Royce has already an order backlog for over £1bn just from the first half of this year.

This heightened awareness includes the UK, where new prime minister Liz Truss recently pledged to increase the defence budget to 3% of GDP by 2030, equating to £27bn of spending.

The business has also streamlined in the last few years, including a restructuring programme. While the months ahead could be tough as the UK stares a recession in the face, the streamlining could help the firm navigate this. The first half of the year also saw a £1.1bn free cash flow improvement. These are all encouraging signs.

Debt concerns

The biggest issue I see with Rolls-Royce is its debt, which as of 30 June stood at £5.14bn. The recent sale of ITP Aero to private equity firm Bain Capital for £1.5bn will alleviate the strain this debt places on the business. However, it’s still of major concern to me. On top of this, rising interest rates will only mean the debt becoming a steeper challenge to overcome.

The business is also engaged in a dispute with its workers as they bargain for better pay. Its latest offer was a 6.5% basic pay increase backdated to from 1 March. However, like all its previous offers, it was rejected. As a result, Rolls-Royce workers are now set to vote on industrial action in the weeks ahead. Should strikes occur, this would be negative for for Rolls-Royce and its share price.

Should I buy?

The shares look cheap. However, I won’t be buying them today. A greater emphasis on defence spending should see the firm prosper. But I think it faces too many headwinds in the months ahead to justify buying the stock right now. While I see long-term value here, I’m placing the stock on my watchlist. If its falls further, I could be tempted to open a small position.

The post Is it time to buy cheap Rolls-Royce shares? appeared first on The Twelfth Magpie.

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• Is now the perfect time to buy Rolls-Royce, Babcock and BAE System shares?
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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK 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.

2022 has been far from a smooth ride for NIO (NYSE: NIO) stock. The Chinese electric vehicle manufacturer grabbed headlines with its monumental 1,100% rise in 2020. Yet since then, it’s struggled to keep up the impressive momentum.

The NIO share price is down nearly 50% this year. Across the last 12 months, the stock has fallen 54%.

So, where will NIO stock go next? Should I be steering clear of it? Or at $17 is this an opportunity for me to grab some cheap shares? Let’s find out.

Latest results

Yesterday saw the release of the firm’s Q2 results. Within the update, there were encouraging signs. Vehicle sales rose by 21% year on year to $1.43bn, and 3.5% compared to Q1. On top of this, total revenue rose by 21.8% compared to Q2 2021 to reach $1.53bn.

Despite this, NIO shareholders will no doubt be focusing on the fall in gross profit. This dropped 14.8% on the year. And compared to Q1, the figure fell 7.4%. What will also be of concern is the firm’s net loss, which widened by a massive 369.6% against a year ago.

2022 struggles

These results paint an accurate picture of NIO’s struggles this year as rising inflation across the globe has pushed up costs. As the business said itself, 2022 has been plagued by “tremendous challenges and cost volatilities.”

NIO has also faced a string of supply chain issues. With China in a continuous battle to eliminate Covid infections, the firm has seen its production halted for stretches.

Despite this, it still predicts it will deliver between 31,000 and 33,000 vehicles in the third quarter, showing it has no plans to slow down.

Electric transition

Even with the above, the biggest issue I see surrounding NIO is the inevitable transition to an electric world, which will have both its benefits and drawbacks.

First, there’s no doubt that governments across the globe will magnify the emphasis placed on the transition to renewable energy. This has already been taking shape. And with the Russia-Ukraine conflict proving it, a reliance solely on conventional energy sources is unsustainable.

For NIO, this is clearly good news. As electric cars become more mainstream, hopefully, the business will see demand for its vehicles increase.

However, this does also alarm me. That’s because I can see a surge in competition in the years ahead as established manufacturers accelerate in the attractive EV market. NIO is expanding in Europe, which should provide the firm with a boost. But how the Chinese firm fares in what’s set to become a saturated market is of concern to me.

Where next?

So, where does the business go from here? And should I be buying NIO stock?

I won’t be buying today. As inflation continues to rise this may further hinder NIO’s operations. And despite it having unique selling points such as its battery-swapping technology, I’m not confident in judging how NIO will stand up against the unavoidable competition. Its share price is low, but right now, it’s not for me.

The post After its latest results, where does NIO stock go next? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK 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.

Lloyds (LSE: LLOY) shares started this year trading for 50p. And while they’ve been as high as 55p at times, today a share in the FTSE 100 bank will set me back only 46p.

With Lloyds rising 2% over the last 12 months, this drop makes me wonder whether it’s now a bargain. And if so, whether I should be loading up on some shares for my portfolio.

Bull case

There’s certainly a lot going for Lloyds right now.

First, interest rates were once again hiked in the UK this month following a Bank of England meeting. And with rates at 1.75%, this will benefit Lloyds.

This is because higher interest rates allow the business to charge customers more when borrowing from the bank. For Lloyds, this should hopefully see its revenues increase in the months ahead.

Another positive is the recent results the business released. With worsening economic conditions, it still managed to post a strong performance for the first half of 2022. Net income rose 12% compared to the same period for the year prior. And more generally, Lloyds upgraded its guidance for 2022, including for its net interest margin.

What also draws me to Lloyds is its dividend yield. This currently sits around 4.6%. And with inflation spiking to 10.1% for July, this passive income stream could prove handy to me in times ahead. While it’s not inflation-beating, it does offer a better return than many of its FTSE 100 peers.

The business also seems to be adapting to the times with its streamlining moves.

This comes predominantly in the form of branch closures, as it was recently announced that 48 Lloyds branches are to be closed by February 2023. While this is obviously not good news for those who lose their jobs or their local branch, with some of its locations seeing visits down as much as 85% in some cases over the last five years, this transition makes sense.

Bear case

With all this said, there are concerns I have with Lloyds.

To start, while rising interest rates could benefit the firm, higher rates may also see customers default on payments.

On top of this, a potential recession looming is a major worry for me. Lloyds has struggled massively in crises gone by, such as the financial crash of 2008. And quite frankly, it’s struggled to recover since then. Economic conditions are worsening as we head further into 2022, and this could mean the Lloyds share price slides further.

The firm is also the UK’s largest mortgage lender. And therefore, the current slowdown in the housing market could also spell trouble for the business. Higher interest rates and inflation have weighed on the market. Lloyds predicts house prices will grow just 1.8% this year. For 2023, it even expects a 1.4% fall.

Should I buy?

So at 46p, is now the time to buy?

I think so. Lloyds is set to face pressure in the months ahead. But at the current price, I’d happily snap up some shares. Its strong results show its resilience, which is key in times like these. Its dividend yield and rising interest rates also draw me to the stock.

The post Should I be snapping up Lloyds shares while they’re under 50p? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

The Scottish Mortgage (LSE: SMT) share price has taken a beating over the past year, down 33%. With inflationary pressures causing a weak economic outlook, investor confidence in stocks such as Scottish Mortgage has waned in 2022.

The investment trust has been a top performer over the past decade. And despite a 52-week low of 670p, the Scottish Mortgage share price is currently sitting at around 900p. Here’s why I think the stock could be a great long-term addition to my portfolio today.

Scottish Mortgage decline

As mentioned, this year has been nothing to write home about for Scottish Mortgage. With inflation spiking globally, including 10.1% and 8.5% for the UK and the US respectively, the trust has been in the firing line of this.

With a focus on growth stocks, some of its top holdings have seen large losses as investors have shied away from such businesses.

Its tech-heavy focus has also fuelled this downfall as the sector has seen a market correction this year. Combined, this has driven down the stock’s price.

Not all bad news

Despite this, it’s not all bad news for Scottish Mortgage.

For a start, the last month has seen the stock rise 13%, clawing back some of its recent losses. This could be a sign that investors are beginning to gain confidence in the trust once again.

Yet more importantly, what’s crucial for me is Scottish Mortgage’s long-term outlook. Sure, it’s had a tough year. However, management highlights that performance is judged over a five-year stretch. And therefore, short-term volatility is less of an issue to me. While past performance is no indication of future returns, the last five years have seen Scottish Mortgage shares rising 114%. Pretty impressive.

As a retail investor, I also deem the range it offers my portfolio to be vital. With one investment, I get a slice of stocks from a variety of sectors and countries.

What this essentially does is help offset risk. By owning a slither of each stock through the trust I’m avoiding the riskier play of buying its holdings, such as ASML, directly.

One issue I do have is its relatively large weighting in China. The nation recently reduced its medium-term lending rate by 10 basis points as data revealed a slowdown in consumer demand. With cracks starting to appear in its economy, this could spell bad news for Scottish Mortgage.

However, I still have faith in the Chinese economy’s potential to produce the ‘next big thing’. Scottish Mortgage has an eagle eye when it comes to finding high-growth companies that produce juicy returns.

I’m still buying

So, despite the near-term issues it may face, I’d still buy the shares today. I think from a long-term perspective its weighting in China has the ability to bear fruit. Add this to the diversity it offers my portfolio, and I’d happily open a position in the stock.

Trading at around the 900p mark, I’d buy Scottish Mortgage shares today and hold for the long run.

The post The Scottish Mortgage share price has suffered. Here’s why I’d still buy! appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended ASML Holding. 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.

Since its IPO back in March 2021, the Deliveroo (LSE: ROO) share price has been on some journey. After initially tanking, the stock saw its price surge as pandemic restrictions saw locked-down consumers taking full advantage of its services. At times, Deliveroo stock has flirted with the 400p mark.

However, a Covid hangover has seen it once again suffer. In the last 12 months, Deliveroo has fallen a massive 75%. This year alone it’s down 53%.

So, could it possibly fall some more? Or would picking up Deliveroo shares now be a smart move?

Half-year updates

Late July saw the business update investors with its second-quarter trading performance. While the group saw a small growth in gross transaction value (GTV), headlines were stolen by the decision to downgrade its full-year GTV growth outlook from between 15% and 25%, to somewhere closer to the 4% to 12% range. With the firm pinning this to “a more cautious economic outlook,” given the way 2022 has played out, this isn’t a surprise.

More recently, Deliveroo provided shareholders with its performance for the first six months of the year, in which it warned of rising pressures from the higher cost of living. While revenues were up 12%, losses before tax grew to £147m, up from just £95m the year prior. Its adjusted EBITDA also sat at a loss of £68m, a large rise from the £26m seen in H1 2021. With that said, this figure had been trimmed compared to H2 2021.

Where next?

After this, what’s next for Deliveroo?

Its most pressing issue is inflation. While this has pushed up staff costs, the cost-of-living crisis has also seen consumers tighten their belts as they cut back on takeaways. With inflation expected to peak at 13% this year, the second half of 2022 could only see further cutbacks on the part of customers.

What also worries me about the business is its inability to turn a profit. Despite a booming 2021, it still posted losses of £300m. Although it’s confident in its EBITDA margin guidance, along with stating that its balance sheet “remains strong,” this is obviously a concern.

One area that provides me with hope is the partnerships that the firm managed to strike. This includes the likes of McDonald’s and WHSmith.

More recently, it also announced a new relationship with Asda for the rapid delivery of groceries. With the deal in place for 15 stores, there are plans to expand the partnership to 300 Asda stores by the end of the year. The hopeful rise in business from deals like these should help Deliveroo offset rising costs.

Would I buy?

So, has the Deliveroo share price bottomed? And should I buy?

The business has shown glimmers of its potential over the last few years. But I won’t be buying any shares today. I think Deliveroo will struggle further into the year as rising costs eat away at its bottom line. Its lack of profit is also of concern to me. Regardless of the drastic fall, I’ll be avoiding Deliveroo for now.

The post Down 75%, has the Deliveroo share price bottomed? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Deliveroo Holdings Plc. 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.

Untold amounts have been wiped off global markets this year. And while the FTSE 100 and S&P 500 have made small recoveries in the last month or so, investors will still be anxiously waiting to see what else 2022 can throw their way. With these falls, I’m on the lookout for beatdown stocks that I can buy for a bargain price. So Rolls-Royce (LSE:RR) shares spring to mind.

The business has been dealt a bad hand as far as the last few years are concerned. Hopping from the Covid-19 pandemic to the tragic war in Ukraine has seen the firm’s operations seriously hindered (and at times halted).

Rolls-Royce is down over 30% this year. So, should I be snapping up some shares?

Latest results

A good place to start is by looking at the half-year results released last week.

The update revealed that compared to the same period last year, Rolls-Royce managed to increase revenues slightly to £5.3bn.

Despite this, investors still dumped the stock as underlying operating profits declined from £307m last year to just £125m this half. The business pinned this drop-off on the issues it currently faces from rising inflation and the Ukraine conflict, citing that “the external environment remains challenging.”

One positive was the minimal increase seen in net debt. Compared to H1 2021, it had risen only £20m to £5.16bn, which is encouraging.

However, even though the small jump does provide some optimism, the debt itself remains a large issue. A debt pile of this magnitude could hinder the business going forward. And with interest rates on the rise, this is a further stumbling block.

Rolls-Royce has taken strides to eradicate some of this debt, such as the sale of ITP Aero to an American private equity firm. Yet for me, this is still a deterrent.

Is it time to buy?

So, is it time to snap up some shares?

Its latest update reveals the harsh reality of the current economic conditions. And the firm is also feeling this in other ways.

For example, the company is currently locked in a pay dispute with labour union Unite. Its previous offer of a £2,000 cash lump sum was rejected. And now members are balloting on a new offer of a 6.5% base pay increase. Taking place from 3 August to 17 August, the outcome of this could have implications for the Rolls-Royce share price.

But while the outlook is murky for the business, a reviving aviation sector could save the firm. Despite the issues currently being seen at airports, the travel sector has made some decent strides to pre-pandemic levels. Investors will be hoping this can continue.

With this said, I won’t be adding Rolls-Royce to my portfolio right now. Its situation is a representation of the tough times we face. And with supply chain issues potentially worsening due to poor China-Taiwan relations, this could see the stock suffer further. I’ll be keeping Rolls-Royce on my watchlist for now.

The post Is now the time to be snapping up Rolls-Royce shares? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK 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.

Tesla (NASDAQ: TSLA) shares have been top performers over the past decade. They’re up a monumental 16,000% over this period. And the electric vehicle manufacturer proved its quality by rising nearly 900% in a Covid-struck 2020.

Despite a 25% rise in the last 12 months, the stock has struggled this year as a combination of factors has seen millions wiped off global markets.

But after gaining some momentum in the last month, rising by over 25%, is Tesla on the road to recovery?

2022 so far

Tesla entered the year trading at $1,200 but has failed to climb above that as rising inflation has seen the growth stock suffer. With inflation rates flirting with the 10% mark in the US and UK, investors have opted to place their money in ‘safer’ value stocks, as opposed to riskier shares such as Tesla. This is not uncommon in volatile times like these. And with the business struggling earlier in the year with supply chain concerns, combined these factors have pushed down the share price.

Despite this, the last month has seen the Tesla share price surge, fuelled mainly by the strong Q2 results the business posted in late July. Total revenue for the period grew 42% year-on-year. And despite supply chain concerns, the firm managed to produce the most vehicles ever in a single month in June.

It wasn’t all good news though, as it did mention a tightening of its margins due to higher inflation and competition for components.

CEO Elon Musk has also been in the headlines this year for his ongoing attempt to take over social media platform Twitter. After initially agreeing to buy the company for $54.20 per share, Musk is now searching for ways to terminate the deal. Any future move he makes would likely impact the Tesla share price.

What I’m doing

So, does the last month’s momentum signal that I should buy Tesla shares?

I’m not too sure. One factor that drives me away is its high valuation. With a price-to-earnings ratio of 107, this shows me the stock is massively overvalued. As a potential investor, this doesn’t sit right with me.

I’m also concerned about competition. Tesla and Musk have continuously adapted and improvised, and that’s led the company to where it is today. However, as the push to an electric world inevitably becomes larger, the pioneer could see its market share dwindle. We’ve already seen many manufacturers successfully enter the space. And with global governments setting ambitious targets for an electric world, this could threaten Tesla.

The business is obviously aware of this. And as a result, has expanded its operations in Europe with a gigafactory in Berlin. It also bolstered its US capabilities with a similar operation in Texas. This will take Tesla’s production to the next level and could potentially assert its dominant market position.

With this said, I won’t be buying the shares today. If there’s a man to navigate a rocky road, it’s Musk. However, I want to see how the rest of this year plays out before purchasing. I’m tempted by Tesla, but I can see its price slipping should these tough conditions we’re facing worsen. I’ll be placing it on my watchlist for now.

The post Tesla shares are up over 25%. Here’s what I’m doing! appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla and Twitter. 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.

2022 has been a tough time for investors. Markets have taken a beating as new 40-year high inflation levels and global conflicts have dented the economic outlook. Yet despite this, GSK (LSE: GSK) shares have been a beacon of light.

With the FTSE 100 seeing slight losses this year, the GSK share price is up over 8%. The last 12 months have seen the pharmaceutical giant’s stock rising by 24%.

The firm continued this positive momentum yesterday as it released an encouraging set of Q2 results. So, is this an indication I should be buying some shares?

The update

GSK shareholders will be pleased with the update the business provided yesterday.

Beating expectations, the company raised its full-year revenue and profit guidance. It now expects sales to grow between 6% and 8%, up from the prior target of 5%-7%. It also raised its guidance for adjusted operating profit, with it anticipated to come in somewhere between 13% and 15% as opposed to the previous 12%-14%.

A 13% growth in total sales year on year to £6.9bn was fuelled by record sales of its shingles vaccine Shingrix, while it also talked of the global strengthening of its R&D pipelines.

With tough economic conditions, this is a solid set of results.

Haleon spin-off

GSK has also been in the news recently for its recent demerger. Last week, the business split off its consumer healthcare business Haleon. Earning a spot on the FTSE 100, it’s the world’s largest standalone consumer health business.

The move should allow GSK to focus more on long-term developments of vaccines and medicines. And, as an added bonus, it’s also siphoned off a substantial amount of debt in the process.

Many spectators believe that the business has failed to perform in recent times. So this demerger offers an opportunity for it to become more streamlined. CEO Emma Walmsley spoke of the move as “a great catalyst” for a bright future for GSK. She also talked of the “Gordian knot” that has seen the business struggle previously.

While it’s still early for the reborn company, this move seems to make a lot of sense. As a potential investor, this is encouraging.

Is it time to buy?

So, should I be buying GSK shares today? Well, I’m tempted.

Apart from the above, I also like the stock due to the steadiness it can offer my portfolio in these uncertain times. And it’s proved its worth with its performance this year.

The products GSK sells are essential, making it fairly immune to the cost-of-living crisis we’re currently facing.

However, it could suffer should its cost rise as we head further into the year. And with supply chain issues always threatening, this could impact the business.

Despite this, I’d still buy GSK shares today. Its strong results show its resilience. And the demerger should hopefully bring a new lease of life for the firm.

The post After its latest results, are GSK shares a buy? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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.

easyJet (LSE: EZJ) shares have been through plenty of turbulence of late. With its operations halted by the Covid-19 pandemic, the business now faces the struggles of a cost-of-living crisis fuelled by racing inflation.

As a result, the easyJet share price has been pegged back by nearly 40% this year. In fact, over the last five years, the stock has plummeted 65%.

So, with the release of its Q3 trading update yesterday, is now the time to buy?

easyJet performance

The tough times the business has been encountering were reflected yesterday in its trading update. For the three months to 30 June, easyJet saw headline losses of £114m.

The main attributor to this was the recent disruptions and cancellations seen across airports of late, as this made up a £133m hit for the business.

The losses seen are significantly better than the £318m for the same period last year. But with passenger numbers jumping more than seven times during this time, to 22m, this shows the effect airport turmoil is having on easyJet.

However, it’s not all bad news. The increase in passengers equated to 87% of FY19 capacity, showing that the sector is slowly but surely recovering back to pre-pandemic levels. easyJet also said its load factors were on the up, peaking at 92% in June.

Looking forward, it also stated that Q4 is currently 71% booked, while sold ticket yield for the period is 13% above FY19.

Is it time to buy?

Despite headwinds, easyJet seems to be edging somewhat closer to its pre-pandemic capabilities. So, is it time to buy some shares?

One area where the business may suffer is rising fuel costs. It has some level of protection as it has hedged part of its supplies up until the end of FY23. However, with the sad war in Ukraine pushing up oil prices, I can still see rising costs having a substantial impact on easyJet’s margins.

It also alluded to how it has “taken action to build the additional resilience needed this summer” as staff shortages have seen operations impacted. How this plays out for the rest of the year is unknown. We’re still seeing delays and cancellations at hubs. And should this drag on later into 2022, this could drive down the easyJet share price.

The cost-of-living crisis may also see demand slow. With inflation set to continue to rise, consumers may be deterred from booking trips away. The crisis has also led to calls from easyJet staff for higher wages.

With all this said, I like the smart moves the business is making for the times ahead. It recently announced an agreement to purchase 56 Airbus A320neo aircraft between FY26 and FY29. And on top of this, it’s also tweaked previous orders to newer, more fuel-efficient aircraft. This is a smart play.

However, I still won’t be buying shares today. The stock has taken a beating this year, but I’m not sure if it’s done yet.

Should its price slip further, I’d be tempted to buy. For now, I’ll be holding off.

The post Is now the time to buy easyJet shares? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK 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.

The last month has seen the stock recover some of its losses, rising 8%. With the shares trading for around 815p, is now the time to buy?

A tough year

The main reason for Scottish Mortgage’s underperformance this year is due to the type of stocks it holds in its portfolio. The trust targets high-growth companies, including names such as Tesla, Nvidia, and Tencent. And with inflation rising globally, 2022 has seen these stocks suffer.

Firstly, this is because the economic uncertainty caused by inflation tends to see growth stocks take the hardest hit as investors move their money from these riskier investments to ‘safer’ value stocks.

Secondly, to combat inflation, interest rates are pushed up. With growth stocks tending to borrow big, in order to grow, this also means the debt on their balance sheet becomes tougher to pay off. Combined, this has seen the Scottish Mortgage share price suffer.

Not all bad news

Despite its struggles this year, I’m still keen on Scottish Mortgage shares.

To start, instead of looking at the dip in its price as an issue, I’m looking at it as an opportunity. The trust’s management team makes it clear that Scottish Mortgage aims to maximise returns over a five-year period. It uses the FTSE All-World Index as a benchmark for this. And safe to say, it’s outperformed this in the latest five-year stint.

As a long-term investor, this suits me. This focus nullifies any short-term headwinds. And the trust has proven this by surviving multiple crises such as the dotcom bubble and the 2008 financial crisis.

I am also drawn to Scottish Mortgage because of the diversity my portfolio receives from a single investment. The trust has a global portfolio, including unlisted shares, all for a cheap ongoing charge of 0.32%. For me, this is perfect.

One issue I see is its weighting in China. This makes up around 20% of Scottish Mortgage’s holdings. And with the country still struggling to keep a lid on Covid-19 cases, this could be an issue. We’ve seen the impact this has had so far reflected through supply chain concerns. Should this continue, this could drag the Scottish Mortgage share price down.

However, over the long term, I think its Chinese focus will bear fruit. It’s the fastest growing economy in the world. And I have full belief in the management team to pick out future winners. While it may see the trust suffer now, from a long-term perspective this doesn’t bother me.

At 815p, I’d happily snap up Scottish Mortgage shares. Its investment strategy aligns with my needs. And the diversity it offers is a great boost for my portfolio. Trading for nearly half of its 52-week high, I’d buy Scottish Mortgage now and hold for the years to come.

The post At 815p, are Scottish Mortgage shares a buy? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.