Image source: Getty Images
It’s been tough for retail investors in recent years. But weakened market sentiment has led to a host of FTSE 100 stocks being on sale.
Here are two out-of-favour shares I’m tracking in September. But are they a buy?
Scottish Mortgage Investment Trust
First on my list is Scottish Mortgage Investment Trust (LSE: SMT). It seems like just yesterday we saw the trust hit an all-time high of over £15. But since then, it has lost over 50% of its value.
Rising interest rates and their detrimental impact on growth shares meant a drop in performance for Baillie Gifford’s flagship fund was somewhat inevitable. As rates rise, these debt-fuelled companies are often the first to bear the brunt. And with the bulk of the trust’s stocks falling into this category, its flagging performance isn’t a major shock.
I don’t think this means it’s time to abandon the stock, however. And with it trading at a 19% discount to net asset value (NAV), it could be the opposite. After all, I’m always on the lookout for high-quality companies trading cheaply.
Scottish Mortgage holds some quality names including Tesla, Amazon, and Moderna. Another of its holdings, Nvidia, has also been on a surge, rising by over 215% in the last year as the interest surrounding AI continues to grow.
There are other perks to holding Scottish Mortgage in my portfolio, with one being access to unlisted shares. This includes businesses such as Elon Musk’s SpaceX, and TikTok’s parent company ByteDance.
Finally, while I’m fully aware past performance is no indication of future returns, Scottish Mortgage has a solid track record, returning nearly 300% to shareholders over the last decade.
Granted, macroeconomic pressures may weigh down on the stock in the near term. But as a long-term investor, I see value in Scottish Mortgage at its current price. If I had the cash, I’d be tempted to buy.
Legal & General
Next up is FTSE 100 stalwart Legal & General (LSE: LGEN). Like Scottish Mortgage, the stock has suffered in the last 12 months, down by nearly 20%. But this discount, in my opinion, makes now a great time to buy.
I mainly like the business due to its strong brand recognition. Its diversification also places it in a strong position.
To add to that, it also has a whopping 9% dividend yield, placing it among the Footsie’s highest returners. And with the business placing greater importance on returning value to shareholders, including generating over £3.5bn in dividends via its cumulative dividend plan implemented in 2020, I’m a big fan.
We’ve seen large volatility in the financial sector this year and this has impacted the Legal & General share price. In the months ahead, I fully expect this to continue. With its assets under management falling in the first half of the year, this is further evidence of the unstable environment right now.
However, in the long run, I see the stock as a solid buy. With its strong market position alongside an attractive source of passive income, if I have some spare cash in the weeks ahead, I’ll be looking to top up my holdings.
