I’d say that the world’s best global shares can be found in the US and UK. Several mega-cap giants are listed in the US, but many are also closer to home than we might think. For instance, in total, FTSE 100 companies derive 75% of their earnings from overseas. 

Fuelling my ISA

I’m looking for the best global shares I’d like to buy now for my Stocks and Shares ISA. First I’d consider oil major Shell (LSE:SHEL). Not only is it the largest company in the Footsie, but it also has the ninth largest turnover in the world. Shell shares are up by 20% so far this year. That follows a 34% gain in 2021. Its performance has been helped by a rising oil price. Crude oil prices have more than quadrupled since the lows of the pandemic back in April 2020. Oil prices climbed throughout much of 2021 as countries slowly opened up their economies post-pandemic restrictions. More recently, political disruption has also helped keep fuel costs elevated.

A word of warning though. Oil prices are notoriously volatile. At some point, they could just as easily tumble. If that were to happen, Shell shares could suffer in the near term.

But what I like about Shell as an investment is its cash flow generation and its discipline in returning cash to shareholders via dividends and share buybacks. It currently offers a dividend yield of around 4%. That’s not the highest among its Footsie peers, but I believe it’s reliable and stable.

Giant global shares

When I think of global shares I often think of the US technology giants like Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT). Although listed in the US, they operate all over the planet and are amongst the largest companies in the world. Technology shares have taken a tumble so far this year. This can most clearly be seen by looking at the tech-heavy Nasdaq 100, which is down 15% year-to-date.

The reason for the weakness is mainly due to expectations that the US Federal Reserve will increase interest rates and remove quantitative easing with the aim of controlling inflation. Both measures have helped to propel tech stocks higher over several years so they could remain under pressure in the near term.

Excellent companies

That said, both Microsoft and Apple are excellent and well-run companies. They offer double-digit profit margins and have enviable competitive advantages. They both churn out ample cash and have rock-solid balance sheets.

Popular investor Warren Buffett is known to like companies that have a moat. Like a moat protects a castle, a durable competitive advantage can protect a company. That’s why it’s encouraging to see Apple form 45% of Buffett’s investment firm Berkshire Hathaway‘s holdings.

Taking a multi-year view, I reckon both Apple and Microsoft will turn out to be excellent investments. They’ve both managed to churn out a phenomenal 25% annual return over the past decade. That’s enough to turn £10,000 into £93,000. Although the past can’t predict the future, and the coming months could be uncertain, I’d still buy both of these global shares.

Harshil Patel owns Apple and Microsoft. The Motley Fool UK has recommended Apple and Microsoft. 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.

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Key points

• The recent global tech-sell off has impacted the SMT share price
• Provides exposure to US and Chinese stocks, both public and private
• Earnings have fallen over the past five fiscal years

Formed in 1909, the Scottish Mortgage Investment Trust (LSE: SMT) is operated by the asset manager Baillie Gifford. Headquartered in Edinburgh, it is currently heavily technology focused. Indeed, the SMT share price did not escape the recent sell-off of global tech stocks. Consequently, it has slumped 24% in the past year. Built for growth over five-year timeframes, SMT may be a good option for long-term growth. I want to know if I should buy this stock or avoid it. Let’s take a closer look. 

Geographical and sector diversity

One of the reasons the SMT share price is so appealing is the vast array of high-calibre companies to which I can gain exposure. While the holdings represent a number of different countries, they are mainly centred on the US and China. These include some of the biggest tech companies, like Tesla Motors, Tencent Holdings, and Alibaba.

While these companies are heavyweights in their industry, the tech industry generally has suffered recently. Investors are retreating from these businesses as we prepare for an interest rate hike next month. Tesla, for instance, is down 17.5% in the past month. In spite of this, its yearly gain is nearly 9%. The overall downward movement of tech stocks has, however, severely dented the SMT share price, because many of them are in its portfolio.

Nevertheless, the leadership of James Anderson, Tom Slater, and Lawrence Burns is competent in achieving long-term growth. They reduced the Tesla position and replaced it with Moderna. This latter company is famous for creating a Covid-19 vaccine, when the pandemic entered its first winter in December 2020. This leadership gives me confidence that the SMT share price can weather most storms that come its way.

Recent results and the SMT share price

Results between the 2017 and 2021 fiscal years do not make terribly attractive reading for shareholders and future investors. During this time, profits have fallen from £15.9m to just £10m. In addition, earnings-per-share (EPS) has decreased from 1.07p to 0.62p. By my calculation, this means that SMT has a compounding annual EPS decline rate of about 10.34%.

At the time of writing, however, the net asset value (NAV) of SMT is around 990p. It is currently trading at 974p. This means that the SMT share price is at a 1.5% discount compared to the value of its underlying holdings. 

While recent results may be off-putting, I still believe in SMT’s power to deliver growth over the long term. I won’t be buying today, because I think the SMT share price may slide further with imminent interest rate hikes. Nonetheless, I will keeping a close eye with a view to purchasing shares in the near future. 

Andrew Woods 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.

When the stock markets are doing well, it is easy to believe that the good times will last. But as is evident from the Covid-19 episode, things can change fast. And in fact, they do even if there are no shocks to the system. Business cycles are part of market economies, creating fluctuations in stock prices. Cyclical stocks are particularly vulnerable to such events. But they can still be solid FTSE 100 growth stocks to buy for the long term. Like the luxury fashion brand Burberry (LSE: BRBY), which I would buy now for £1,000 if I had not done so already.

Burberry’s recent challenges 

The last few years have been difficult for Burberry, to be sure. China is one of the company’s biggest markets, which means that it was one of the first stocks to get impacted when the coronavirus first came around. Between February 2020 and March 2020, the stock lost more than half its value. It started recovering soon after, but the journey to recovery has not been without its challenges. Its CEO, Marco Gobbetti, who was credited with turning the company around earlier, exited during this time. And swinging back into strong financial health has also taken its time. 

China drives the FTSE 100 stock

But I am firmly of the view that Burberry could be a very good stock to buy and hold for the next few years at least. There are plenty of reasons to believe so. First, China’s growth is back. After a decline in its economy during the pandemic, its growth bounced back to 8.1% in 2021. This is good for the iconic British brand, whose demand can be sensitive to consumer optimism. Economic recovery in other markets, like the UK, should also bode well for it. The UK economy just came back up to its pre-pandemic levels and the outlook is positive too. This has shown up in latest growth projections as well. 

Pandemic’s end

The company expects that for its current financial year, its adjusted operating profit will increase by 35% from the year before. The near-end of the pandemic is also a positive for it. This is because it should allow further opening up of travel, which could also impact it positively, encouraging consumers to travel to shopping destinations. Moreover, I see it as a relatively inflation-proof stock, which is a significant merit at this time, in my view. Consumers who buy its products are unlikely to be overtly concerned about a small price increase.

Possibly undervalued FTSE 100 growth stock

Despite these positives, this FTSE 100 growth stock could be seen as relatively undervalued. It has a price-to-earnings (P/E) ratio of 17.5 times at present, which is far lower than its global peers like LVMH, which trades at a P/E of 28 times. It is higher than that for the FTSE 100, which is at around 16 times, for sure. But going by the outlook for cyclicals, I would expect it to outperform the FTSE 100 this year, which in turn should be reflected in a higher than average P/E. 

Manika Premsingh owns Burberry. The Motley Fool UK has recommended Burberry. 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.

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It has been an incredible couple of years for shareholders of Apple (NASDAQ: AAPL). The Apple share price has more than doubled in the past two years. Over the past year alone it has grown 32%.

Critics point to a thin pipeline of future innovation and argue that the shares are overvalued. I reckon the shares can double again, although it may take longer than two years this time around. Here is why.

Business model over innovation pipeline

An unattractive product and service offering could hurt both revenues and profits. But I see the supposedly thin innovation pipeline as a red herring for two reasons. First, Apple always plays its cards close to its chest. The truth is no-one really knows what it might release in coming years.

Even more importantly, the lack of new products is actually the reason for Apple’s colossal financial success in my view. It has always had a lean portfolio, reducing supply chain complexity and customer confusion. Instead it focusses on making as much money as possible from a small number of products and services connected in a single ecosystem.

That helps explain why Apple’s revenue has grown at a compound annual growth rate of 8.9% over the past decade, and net income showed growth of 8.5%. Few companies can expand their product range massively without sacrificing profit margin. With its lean focus, Apple is able to grow revenues strongly but still increase earnings at almost the same rate. I think Apple will continue with this proven business model. That should help it boost earnings in coming years, supporting the share price.

Shareholder focus

Apple’s share buyback programme has reduced the number of shares in circulation. So over the past 10 years, while net income grew at a compounded annual rate of 8.5%, earnings per share put in an even better performance: 13.6%.

A big fan of Apple’s approach to buying back its own shares is shareholder Warren Buffett. As he put it in last year’s shareholders’ letter, Buffett’s Apple position “vividly illustrates the power of repurchases”. Despite selling some of his Apple stake, Buffett saw his shareholding grow from 5.2% to 5.4% of Apple purely because of share repurchases by the company.

If Apple overpays for its own shares, that could harm the company’s profitability. But so far, I think the programme has shown the company’s focus on shareholder returns. Higher earnings per share can drive share prices upwards, if a company’s price-to-earnings ratio remains constant. If Apple stays focused on shareholder value in coming years, I think its share price could keep rising.

The Apple share price looks attractive

Even after doubling, Apple’s price-to-earnings ratio of 28 is lower than other tech stocks like Amazon at 47 or Netflix at 36.

I do not think it is cheap, and indeed a tech stock crash could bring Apple crashing down with its peer group. But in the long term, Apple has proven again and again that it can grow both top and bottom lines. Last year, it reported the highest revenue and profit in its history, by a considerable distance.

Apple is a growth machine that continues to go from strength to strength. I think that can support ongoing increases in the Apple share price. I would consider buying it for my portfolio today, hoping it could double again in the next few years.

Christopher Ruane has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Apple. 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.

Alternative energy is a popular investing theme at the moment. With ongoing shocks to energy demand and supply, as well as an increasing focus by some people on the environment, I think alternative energy will grow in importance. Two UK companies in this sector are Ilika (LSE: IKA) and ITM Power (LSE: ITM). Here I want to consider whether either the Ilika or ITM share price represents a potential bargain for my portfolio.

One problem, two solutions

Although both are alternative energy companies, they have different technical perspectives. Ilika is focussed on developing solid state battery technology. That can help store energy for users such as electric vehicle drivers. ITM Power is focussed on hydrogen as an energy source. So far its focus is more on industrial than consumer applications, although that could change down the line.

I see a wider variety of possible applications for solid state batteries, whereas hydrogen energy is just one more possible energy source among many. But I think it is too early to say with any confidence whether either of the two approaches is likely to end up with large, enduring market demand.

Valuation collapse

Ilika’s market capitalisation of £120m is less than a tenth that of ITM Power, which commands a valuation of £1.4bn. Ilika is also a much smaller business. In its interim results, it reported revenue of just £0.2m compared to £4.2m at ITM Power. Neither is a big number, especially when one considers the market capitalisations of the two firms. But that is not unusual among early stage companies. Initially, revenue can be low as the technology is perfected and commercialised. But hopefully down the line it ramps up. Both Ilika and ITM Power now have their own commercial scale factories and are working to build growing sales pipelines.

Over the past year, Ilika has seen its share price fall by 50% while ITM Power has dropped even more, tumbling 55%. I think these prices reflect valuation concerns among investors. Both companies have promising technology, but they still have a lot of work to do to scale them commercially. They also need to prove that they have a viable business model. For now, both are loss-making. If the technologies prove attractive, I expect competition to get fiercer. That could be bad for future profit margins at the companies. Losses could continue for years to come.

My move on the Ilika and ITM share prices

The share prices at each of these alternative energy companies has tumbled in the past year. Both have promising technologies that could yet form the basis of substantial businesses. But for now, revenues remain low and there are no profits in sight.

I feel it is too early to say whether either Ilika or ITM will make it into the big time as the alternative energy industry grows. So even after the share price falls, I continue to see both shares as too speculative for my portfolio at the moment. The two companies trade at a huge multiple to sales, let alone earnings. So I do not regard either share as a bargain. I will not be adding them to my portfolio.

Christopher Ruane 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.