I’m not slowing down as we head towards the New Year. And I’m using December as a final chance to add some high-quality stocks to my portfolio. What else would I focus on rather than FTSE 100 shares?
With any spare cash I have in the weeks ahead, I’m planning on opening a position in these two.
Scottish Mortgage
Scottish Mortgage Investment Trust (LSE: SMT) made a name for itself in pandemic-struck 2020, going against the grain and rising by a staggering 105%. However, it’s failed to keep up that impressive performance.
I’m not all that bothered. Instead, I think December could be a smart time to load up on some shares. Currently, the trust trades at a 14% discount to its net asset value. What this essentially means is that I can get access to a host of companies cheaper than their market rate.
With that, I also like the diversification it provides me. I like to keep my investing as simple as possible. Therefore, getting access to over 100 companies through a single investment, for me, is ideal. With 32% of its holdings being private companies, I also gain exposure to opportunities I couldn’t access as a retail investor.
It’s taken a battering in recent times due to its focus on growth stocks. These companies tend to be leveraged with large amounts of debt to fuel growth. And with interest rates at highs not seen for years, this becomes more difficult to service. On top of that, with it heavily invested in China, ongoing geopolitical tensions could be a worry.
But at the same time, I think both of those factors are short-term worries. Growth stocks offer exciting opportunities. After all, Scottish Mortgage did buy Tesla for $6 a share back in 2013. And while Chinese exposure poses a threat, on the other hand, I think the country could provide some of the best opportunities in the times ahead as its economy continues to expand.
Burberry
Another stock I’d buy is Burberry (LSE: BRBY). It has struggled in the last 12 months, falling by over 30%. But as we head towards 2024, I’m more and more tempted to buy.
The biggest problem surrounding Burberry is a slowdown in global spending. Rampant inflation has seen consumers tighten their belts. And this was evident in the firm’s latest results where comparable store sales growth fell to 1%. While inflation is heading in the right direction, consumer confidence remains fragile. For the foreseeable future, I imagine spending will continue to remain slow.
Regardless, I think the long-term looks positive. Asia, where the British brand is popular, is a region filled with a growing middle class. By 2027, it’s estimated that 1.2bn Chinese will be in the middle class. More generally, the global luxury sector is also expected to more than double in size by 2030.
There’s plenty more to like about Burberry. It looks fairly priced with a price-to-earnings ratio of 13. While a dividend yield of over 4% will provide me with some extra cash should its share price stagnate in the months ahead. In my opinion, it looks like a smart buy for the long run.
