Could Scottish Mortgage shares reach £10 this year?

Over the past several decades, Scottish Mortgage Investment Trust (LSE: SMT) has been very rewarding for shareholders. Over the past 10 years, Scottish Mortgage shares have increased in value by more than 450%. The investment trust also has one of the longest dividend payouts of any stock on the London market.

But does the 37% drop in share price over the past year indicate that the glory days are over? Or could it be a temporary pullback that gives me an opportunity to add this proven player to my portfolio?

Change the market

As an investment trust, Scottish Mortgage invests in dozens of different companies. This means that owning stocks helps me to open my portfolio to different companies operating in different sectors and geographies.

That diversification only goes so far. The trust invests in a number of clear strategic themes. Which explains why there has been (and remains) so much in tech companies. With the retreat of technology over the past year, it’s no surprise that Scottish Mortgage shares have fallen.

Stock price potential

As technology stocks return to more investors, the value of trust stocks in rich companies Tesla and Shopify can increase. That could cause the share price to rise again, perhaps to over £10 each. It was as high as recently as April, although touching the level again would take up 31% of the current share price.

Getting to £10 again is not certain – and even if it happens, I’m not sure it will happen this year. A strong economic recovery could help. But if the big economy continues to shrink, growth stocks may continue to trade at current prices, or lower, for a long time.

The trust is focused on growth and we have recently lived for many years in growth stocks. With the recession and rising interest rates, that is over. But I am confident that growth stocks will return as the global economy strengthens again. Meanwhile, even though growth stocks fell overall, there were still winners in the trust’s portfolio.

Long-term strategic investment

Despite this, I see the current Scottish Mortgage share price as a buying opportunity for my portfolio and would buy it if I had the money to invest.

I believe in long-term investment. While I think Scottish Mortgage may continue to weather market movements in the short term, over the longer term I remain optimistic about the outlook. It has identified several key business trends that I believe will be important in the coming years.

Using them, it has selected a number of companies in each area that it considers to have the potential to do well. If only a few do well, most trusts can benefit greatly. I can’t time the market so I don’t know when the tide might turn again for technology valuations. If I wait too long, I might miss the next boat.

So, while Scottish Mortgage shares may not reach £10 anytime soon – and indeed it could continue to go south – I believe the current price offers potential value from a long-term perspective.