Scottish Mortgage Investment Trust (LSE:SMT) shares have underperformed over the past year, plummeting nearly 30%. This serves as a reminder of the volatility risk associated with some of the more speculative areas of the market it invests in.
Nonetheless, I think the FTSE 100 trust‘s top growth stock holdings could bounce back. After all, big falls in the Scottish Mortgage share price are par for the course, given its long-term investment horizon.
So, let’s examine three investments that could lead a recovery in the company’s share price.
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Moderna
Massachusetts-based biotech company Moderna (NASDAQ:MRNA) is Scottish Mortgage’s largest position at 9.4% of the portfolio. The Moderna share price is down 10% on a 12-month basis.
Financial results for full-year 2022 were mixed. Total revenue of $19.3bn was higher than the $18.5bn delivered in 2021. However, demand for Covid-19 vaccines is beginning to stagnate, which could limit the company’s growth prospects.
Nonetheless, medications in other areas might offset this. Moderna plans to submit its RSV vaccine for US Food and Drug Administration (FDA) approval this year in a race against Pfizer and GSK, who which also developed candidate vaccines.
In addition, Moderna’s late-stage melanoma vaccine showed tremendous potential in a phase 2b trial last year. Due to its exciting pipeline, I think this pharma outfit can continue to disrupt the sector and boost the Scottish Mortgage share price in turn.
MercadoLibre
MercadoLibre (NASDAQ:MELI) is the fund’s fourth-largest position at 3.9% of the portfolio. Dubbed Latin America’s Amazon, the stock is up 5% over the past year.
The e-commerce giant delivered year-on-year growth in Q4 across its three largest markets. Gross merchandise volume rose 83% in Argentina, 22% in Brazil, and 28% in Mexico. Its quarterly earnings per share of $3.25 beat consensus estimates by $0.93.
Beyond digital commerce, the company also offers financial services, allowing millions of consumers who can’t access the region’s banking system to be paid, borrow, lend, and invest.
MercadoLibre operates in unstable political jurisdictions, which means risks. Nonetheless, many analysts believe Latin America has higher growth potential than developed countries. Scottish Mortgage shares could benefit from exposure to these emerging markets.
Tesla
Tesla (NASDAQ:TSLA) is the third-largest Scottish Mortgage holding at 4.1%. Elon Musk’s company operates at the cutting edge of the electric vehicle (EV) revolution.
Tesla’s share price has surged 100% since its intraday low in January. Buoyed by increasing demand for its cars following price cuts, I think the positive momentum can continue as the year unfolds.
Due to brand loyalty and investment in new technologies, I think it’s unlikely Tesla’s pole position in the EV market will be displaced any time soon.
Macroeconomic tailwinds favour the business too. The US government is investing heavily in charging infrastructure and offering tax credit incentives for EV purchases.
A price-to-earnings ratio of 56.66 is a concern. The stock looks considerably more expensive than many competitors. Nonetheless, I like the Scottish Mortgage portfolio’s exposure to one of the world’s most innovative enterprises.
My Scottish Mortgage shares
I already own Scottish Mortgage shares. I’m comfortable with my position, so I’ll continue to hold.
If a global growth stock rebound materialises in 2023, I believe there’s a good chance the Scottish Mortgage share price can rise higher.
