The Cineworld (LSE: CINE) share price is having a storming start to 2022. Already this year, the stock is up 39% as I write today. However, to throw cold water on the fire, over one year the share price is still down by 35%. Ouch.

Does the recent surge mean the cinema chain is back on track? Or is it a false dawn and not worth me buying the shares? Let’s take a closer look.

The bull case

It seems like the worst of the pandemic may be over. Thankfully, Omicron didn’t require a lockdown like previous strains of Covid, even though case numbers spiked. Unless there’s another more severe mutation, I can’t see there being any further lockdown either. This will clear a huge potential risk from Cineworld’s business, and likely lead to raised profit guidance in the months ahead.

Recent trading supports this view. In an update from Cineworld released just this week, the company said attendances have steadily grown through the second half of 2021. Revenue has also grown in line with the increases in attendance. The improved revenue profile together with cost controls has resulted in positive cash flow in the fourth quarter of 2021 too.

The bear case

One of the biggest risks to the shares is the considerable debt on Cineworld’s balance sheet. According to the last published accounts, the company had $8.4bn of net debt. Considering that Cineworld’s market value is only £610m, and is currently loss-making, this borrowing is highly significant. It’ll be crucial for Cineworld to maintain its positive cash flow in the months ahead so it can service this debt load.

There’s another big uncertainty on the horizon for Cineworld. It’s been ordered to pay C$1.23bn by a Canadian court ruling due to a breach of an agreement with Cineplex. Before the pandemic, Cineworld had agreed to acquire Cineplex, but pulled out of the deal when it had to close its cinemas during lockdown. Cineworld is appealing the ruling, but it still leaves a dark cloud over the business for now.

Should I buy at this Cineworld share price?

There’s no doubt that Cineworld has had a very difficult period through the pandemic. However, I’m most interested in the potential for recovery if I buy its shares today. Earnings are expected to rebound into positive territory in 2022. Then, all going well, City analysts are expecting huge growth in earnings again in 2023. If this plays out, the Cineworld share price is valued on a price-to-earnings ratio for 2023 of only 5.

However, there’s a lot for the company to deal with before then. For a start, the company has to stay cash flow positive so that it can pay interest on that huge debt pile. Then, the looming court ruling could also shatter Cineworld’s balance sheet if it ends up having to pay the damages after the appeal.

So, for now, there are just too many risks for me to want to buy the shares. The valuation looks cheap, but I think it takes into account these significant risks ahead. I’ll revisit the company once the outlook on the court ruling is clearer.

Dan Appleby owns no share 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.

One of the big challenges of investing is preparing for the next stock market crash. History tells us that the market has crashed roughly once a decade in the past 100 years.

Of course, this is not a fixed pattern. There is no telling when there will be another crash, and past performance should never be used to guide future potential.

However, how the market has behaved in the past is a warning to investors. We can never take the market for granted, and it is impossible to predict what is just around the corner. 

Stock market crash catalyst

Right now, there are plenty of reasons to suggest a stock market crash could be on the horizon. Interest rates are rising, which will increase the cost of borrowing for corporations and individuals. Consumers and businesses may also reduce spending as prices rise, and company profit margins could take a hit. 

On top of these factors, the cost of living is rising, hitting consumer confidence. And as interest rates increase, equities become less appealing compared to bonds, which could drive a rotation away from equities into other investments. 

Put simply, it looks as if economic headwinds are building, and this is not good news for the stock market. 

Nevertheless, as I noted at the beginning of this article, it is impossible to predict what the future holds. The stock market could crash tomorrow… or double over the next 12 months. 

Over the past 10 years, numerous analysts have tried to predict the end of a bull market. They have all been wrong. Therefore, rather than trying to guess whether or not a stock market crash is just around the corner, I am trying to prepare for all eventualities. 

Preparing for all eventualities

Rather than trying to time the market, I am focusing on buying securities that should be able to continue performing in all market environments. 

A great example is Diageo. Even in a market crash, I think the sales of high-quality alcoholic beverages will hold up. This should ensure the underlying business continues to push ahead, even if investors start to flee. 

Another example is the pension and long-term insurance companies Phoenix Group and Legal & General. 

Phoenix manages old books of pension and life insurance policies. These should be relatively unaffected by any economic disruption.

While a stock market crash might impact the company’s balance sheet, management uses financial derivatives to try and limit risk (Legal & General is exposed to the same risk and uses the same risk management techniques). 

Meanwhile, I think it is unlikely a market slump will significantly impact the sales of insurance and pension products Legal provides to its consumers. 

I would buy all of these companies because I believe they have the qualities required to help navigate a stock market crash. Even if they may suffer in the short term, over the next 10 years, I believe they have bright prospects. 

Rupert Hargreaves owns Diageo. The Motley Fool UK has recommended Diageo. 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.

Key points

• These FTSE 100 stocks are each expected to deliver earnings growth of 17% or more over the coming year
• They provide access to exciting growth markets including Asian consumers and cutting-edge medicine
• All three of these stocks appear reasonably priced

Today I want to talk about three FTSE 100 stocks with the potential to deliver sparkling growth in 2022. They’re reasonably priced, too, in my view, which is why I’d consider adding them to my portfolio today.

Healthcare hero

My first pick is pharmaceutical giant AstraZeneca (LSE: AZN). CEO Pascal Soriot has spent the last nine years rebuilding the company’s pipeline of new products.

This patient approach was needed after previous management left the cupboard bare. But AstraZeneca’s heavy investment in research and development is starting to deliver serious results. Sales rose by 32% during the first nine months of 2021, while underlying earnings climbed 22%. Full-year forecasts suggest 2021 earnings growth of 27%.

There’s always some risk that new medicines won’t achieve the blockbuster success that’s hoped for. But City brokers expect AstraZeneca’s earnings to rise by further 31% in 2022. These forecasts price the stock on 18 times 2022 forecast earnings, with a 2.4% dividend yield.

That’s cheap enough for me to consider the stock as a potential buy for my portfolio.

FTSE 100 stock, pure Asian growth

Over the last three years, FTSE 100 stock Prudential (LSE: PRU) has spun off its UK and US businesses and transformed itself into a pure-play insurer that’s focused on fast-growing consumer markets in Asia and Africa.

One downside of this strategic shift is that the dividend has been slashed and now yields just 1%. There’s also no guarantee that past rates of growth will be maintained.

However, I think the Pru’s results so far look promising. New business sales in Asia and Africa rose by 17% to $2,083m during the first half of last year. Adjusted operating profit for the same period climbed 19% to $1,571m.

Analysts expect the after-tax profit from Prudential’s Asia and Africa businesses to rise by 31% for 2021. In 2022, profits are expected to climb a further 17%. That leaves Prudential stock trading on just 15 times 2022 forecast earnings, which looks modest to me. I’d be happy to consider buying this share at current levels.

Packaging growth play

Internet shoppers caused demand for packaging to boom last year. FTSE 100 cardboard box specialist DS Smith (LSE: SMDS) saw sales rise by 22% to £3,362m during the six months to 31 October. Adjusted earnings per share were 33% higher, at 13.7p.

Broker forecasts for the full year to 30 April suggest this momentum will continue, with earnings of 16.2p per share for the second half of the year (which included Christmas). Of course, these numbers rely on continuing strong demand. Inflation is also a potential risk — the costs of paper and energy have risen sharply.

However, CEO Miles Roberts says that Smith’s has been able to increase its prices. This has offset most of the big cost increases and should protect the group’s profits. Brokers also remain bullish. The City expects to see earnings rise by a further 19% in the 2022-23 financial year.

I think DS Smith looks reasonably priced and should be positioned well for growth. I also like the group’s focus on recycling and the circular economy. I’d be buying DS Smith today if I didn’t already hold a sizeable chunk in my portfolio.

Roland Head owns DS Smith. The Motley Fool UK has recommended DS Smith, and Prudential. 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.

My investment portfolio is made up of top UK shares of all shapes and sizes. Here is a FTSE 100 and a FTSE 250 stock I aim to hang onto for a very long time.

A top FTSE 250 healthcare share

I think my shares in veterinary services provider CVS Group (LSE: CVSG) will create handsome returns as Britons spend increasing amounts on their pets. High adoption rates during Covid-19 lockdowns also powered this sort of spending through the roof. But the amount we collectively forked out on animal care was rising strongly in the years before the pandemic, suggesting that this is no passing fad.

Forecasts from Mordor Intelligence on the animal healthcare market certainly suggests CVS Group has room for significant growth. It thinks the UK veterinary services market will be worth $2.4bn by 2026, up from the $1.4bn in 2020.

CVS Group may suffer some trouble if shortages of veterinarians worsen. “The group’s done a lot to help keep retention and vacancies at acceptable levels,” as analysts at Hargreaves Lansdown recently commented, “but it’s something worth keeping an eye on.”

Right now though, I think the brilliant sales opportunities coming its way still makes this a FTSE 250 share worth owning.

City analysts expect earnings at CVS Group to rise 7% in this financial year to June. This leaves the company trading on a P/E ratio of 24.7 times. Such a hearty valuation could prompt a share price correction if trade begins to slow. But as things stand, I think the healthcare share is worth every penny of its premium valuation.

A FTSE 100 stock built for growth

A big risk facing Bunzl (LSE: BNZL) in the near-term is a sudden fall in Covid-19 equipment. Sales of its gloves, sanitiser, masks and the like have remained strong as the Omicron variant has driven infection rates higher. Toppling cases in some parts of the globe need to be watched carefully then.

It’s my opinion though that Bunzl remains a top buy, despite this risk. I bought the FTSE 100 business long before the pandemic and plan to cling onto it forever. It supplies must-have products for a variety of industries like healthcare, food service, retail and cleaning. It also has a broad geographic footprint as it sells its goods into more than 30 countries.

This strength-through-diversification platform isn’t the only reason I love brilliantly-boring Bunzl however. I also like its strong track record of growing annual earnings by way of acquisitions. And, pleasingly, the company has no plans to slow its M&A ambitions. Bunzl made more than a dozen acquisitions in 2021, taking total spending to a whopping $950m for the past two years combined.

City forecasters believe earnings will match the previous years levels in 2022. This leaves Bunzl trading on a forward P/E ratio of 17.6 times. This looks pretty cheap, in my opinion. So cheap in fact that I’m thinking of buying more of the FTSE 100 business for my portfolio.

Royston Wild owns Bunzl and CVS Group. The Motley Fool UK has recommended Bunzl and Hargreaves Lansdown. 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.

The FTSE 100 index is home to British corporate giants, many of them in business for several decades. This large-cap index mainly comprises financial, consumer discretionary and industrial sectors. In fact, these three groups form 60% of the index. Right now I’d say this is an advantage for it. Let me explain.

Time for the FTSE 100 to shine?

For many years, the FTSE 100 lagged while technology boomed. As the technology-filled Nasdaq achieved an annualised return of 21% over the past five years, the Footsie only managed 5% per year. But after several strong years, US technology shares started 2022 on a weaker note. This is mainly down to a change of stance from the US federal reserve. To put it simply, the high-growth technology sector benefits from low interest rates. Companies are valued by discounting future cash flows and high-growth companies are more sensitive to changing interest rates. After many years of low and falling interest rates, the world’s largest central bank indicated it will now start to raise rates to battle inflationary pressures. With technology shares possibly showing no signs of improvement any time soon, could it be time for the FTSE 100 to shine? I’d say so.

It’s already one of the best-performing major indices in the world so far this year. Although nothing is guaranteed, I reckon this could bode well for the coming year.

How to invest £10,000 now?

So how would I invest £10,000 right now? I could buy a FTSE 100 exchange traded fund (ETF). This financial instrument tracks and imitates the performance of these 100 shares. Alternatively, I could pick a few carefully selected shares instead. I reckon some stocks could perform better than others in the current market environment.

For instance, I really like mining giant Rio Tinto (LSE: RIO) right now. It provides some protection against rising inflation due to its exposure to commodities. Iron ore prices have been rising over the past few months, and I reckon momentum could push prices higher. Commodity prices could also be helped by economic support measures from The People’s Bank of China, the country’s central bank. Commodity prices can be volatile and uncertainties remain, but I reckon Rio Tinto is an established and well-managed company. It should help to provide some diversification against falling technology shares.

A portfolio staple

Next, I’d pick a consumer staples stock. My top pick is drinks giant Diageo (LSE: DGE). It owns several hundred famous drinks brands, many of which have been around for decades, if not centuries, like Guinness. Diageo’s consumer brands can be sticky, so when prices rise it’s able to pass on these higher costs to customers. This protects its profit margins. Diageo benefits from metrics that make it a high-quality stock, in my opinion. It offers a profit margin of nearly 30%, a return on capital employed of 15% and a dividend yield over 2%. All of this while it still manages to grow sales and earnings. It needs to protect against imitators and competitors, but so far it has managed to do so effectively.

I reckon I could split the £10,000 investment by allocating £5,000 to the FTSE 100 ETF, £2,500 to Rio Tinto and £2,500 to Diageo. That way, I could diversify and allocate some funds to my top picks too. Of course, I’d make these investments in my Stocks and Shares ISA to benefit from its tax advantages.

Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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.

Key points

• Warren Buffett has built a large passive income portfolio over the past few decades 
• He focuses on buying high-quality growth stocks 
• I plan to replicate this strategy to generate income 

Warren Buffett is widely praised as being the world’s best investor. He has turned an initial investment of around $100,000 into one of the world’s largest companies, currently edging in on a $1 trillion market capitalisation. 

For the most part, Buffett built his fortune acquiring value stocks, but he has also built a vast portfolio of income investments. And it is this income strategy I plan to follow to help develop a passive income stream. 

Buffett the dividend investor 

Buffett is not a dividend investor per se, but it is a side effect of his strategy. The investor tries to find companies that earn large, sustainable profit margins and return excess profits to investors. As these corporations grow, they can increase shareholder cash returns, becoming income champions in the process. 

One of Buffett’s most famous investments is Coca-Cola. When he first bought the stock in the late 1980s, the shares supported a dividend yield of around 3%. Over the past three decades, the firm has consistently increased its annual payout as profits have expanded. Buffett’s investment now supports a dividend yield of approximately 50%, thanks to this growth.

And this is the process I plan to use to build a passive income. Rather than focusing on the market’s highest-yielding stocks, I am looking for companies that have the potential to increase their dividends over the next decade or so. 

I believe these companies will help me achieve my goal of generating a passive income of £500 a month. 

Passive income investments

I think healthcare is one of the most attractive sectors to pursue this strategy. Two of the top income plays in the sector I would acquire include Hikma and AstraZeneca. These stocks currently offer dividend yields of less than 2%. Still, I think there is potential for substantial growth over the next decade as they develop their drug pipelines and customer offer. 

Another example is drinks giant Diageo. The stock currently offers a dividend yield below the market average. Yet, with the enterprise forecasting sales growth of between 4% and 6% for the next decade, I think the distribution will rise steadily as we advance. 

Of course, there is no guarantee that any of these companies will increase their dividends from current levels. Challenges they could face include rising costs, putting profit margins under pressure. This will reduce the amount of cash available for distribution to investors. Competitive forces may also impact earnings and sales growth. 

According to my calculations, to generate a passive income of £500 a month, or £6,000 a year, I will need to build a portfolio worth around £180,000. That is assuming I can earn a yield of about 4% on my investments. Even though the stocks outlined above only yield around 2% on average today, assuming they can grow their payouts by 7% a year, on average, I think it is possible to hit this target. 

Rupert Hargreaves owns Diageo. The Motley Fool UK has recommended Diageo and Hikma Pharmaceuticals. 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.

The FTSE 250‘s Ashmore (LSE: ASH) is one of the world’s leading investment managers specialising in value-oriented emerging markets assets.

But emerging markets have been underperforming lately. And at 285p, Ashmore’s stock price is down about 37% over the past year.

Several emerging market stocks are down

However, Ashmore isn’t the only stock in the sector that’s down on its luck. Two such beasts reside in my own portfolio. I’m holding Fundsmith Emerging Equities Trust (LSE: FEET), which at 1,305p is down around 16% compared to one year ago. And I’ve got shares in Vinacapital Vietnam Opportunity Fund, which at 499p is about 9% lower in 2022 so far. But in fairness, it’s up by around 14% over the past year.

Ashmore’s chief executive Mark Coombs said in a trading statement this week that the firm’s recent operational underperformance arose because of challenging conditions. He pointed to things such as “persistent global inflation expectations, new Covid-19 variants and weaker growth in China”. 

But looking ahead, Coombs is optimistic about a recovery in emerging markets — and it could be soon. He thinks the global macro-economic environment looks set to improve and that could help emerging markets to thrive.

For example, he sees firmer commodity prices as a positive. And he thinks valuations already accommodate higher base interest rates. However, he feels emerging market equity and income valuations don’t account for much of the positive outlook. If he’s right, there could be an interesting value situation now with emerging market stocks and investments.

The case for investing

But why should I bother targeting investments in emerging markets? To answer that, I’m going to repeat what FEET’s chairman Martin Bralsford said in the company’s half-year report last August.

He reckons the case for investing in emerging markets “has not diminished”. There’s a growing consumer class in emerging economies. And they are being served by businesses with “strong local brands, innovative business models and some high-quality management teams“. Bralsford thinks emerging markets are catching up with the developed world and therefore continue to present good opportunities for investors.

I reckon there’s potentially good value to be had with these three stock opportunities right now. Ashmore’s forward-looking earnings multiple for the trading year to June 2023 is just below 13. And the anticipated dividend yield is around 6%. Meanwhile, FEET is trading on a price-to-earnings (P/E) ratio just below six with the price-to-tangible-book value around 0.87. And VOF’s P/E is close to just two with a price-to-tangible-book value of about 0.8.

Of course, a low-looking valuation doesn’t guarantee a decent long-term investment performance for me. And emerging markets could continue to struggle causing my investments to fall further.

But I’m optimistic that the pandemic will fade during 2022 and emerging economies will continue to recover. And I’d prefer to buy investments like these when they look cheap rather than when emerging markets are booming and the stocks look expensive.

Kevin Godbold owns shares in Fundsmith Emerging Equities Trust and in Vinacapital Vietnam Opportunity Fund. 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.

I believe getting exposure to gold is a good idea as inflation surges. One way I’m thinking of doing this is by buying metal producer Petropavlovsk (LSE: POG). This penny stock offers exceptional value for money as it currently trades on a forward P/E ratio of 5.1 times.

Gold prices just hit their highest since mid-November at around $1,842 per ounce. They’re now within striking distance of August 2020’s record high of $2,069 and could be preparing for a fresh run.

I think Petropavolvsk could be a great UK share to ride this boom. And from a long-term perspective, I think there’s much to like too, as the company steadily increases output from its low-cost Pokrovskiy Pressure Oxidation (POX) production hub in Russia.

Gearing up for a gold rush

It’s been said that central bank interest hikes could damage gold prices and, by extension, profits at firms like Petropavlovsk. This has the potential to smack precious metals values and make it more expensive to hold assets like gold.

This is a possibility I need to consider. But I’m also aware that such tightening might actually have little effect on bullion prices. The World Gold Council (WGC) says: “While rate hikes can create headwinds for gold, history shows their effect may be limited.”

Besides this, the WGC also reckons that real rates (interest rates adjusted for inflation) will remain “depressed” even if central banks act again. It says that this is important “since gold’s short- and medium-term performance tends to often respond to real rates.”

Another top penny stock to own

I’m also considering buying Jubilee Metals Group (LSE: JLP) today for a couple of good reasons. First of all, this mining share also specialises in precious metals production, in this case the haulage of platinum group metals (PGMs) from the ground. These so-called hard currencies also attract massive safe-haven interest from investors when inflation soars.

As someone who invests for the long term however, it’s Jubilee Metals’ important role in the green economy which is attracting my attention. PGMs are bought in massive quantities by the auto industry where they are loaded into catalytic converters to reduce emissions. These materials are required in larger and larger quantities in trucks and passenger vehicles because environmental legislation is becoming steadily tougher.

The growing popularity of green hydrogen could also supercharge demand for Jubilee Metals’ product. Platinum is well-suited as a hydrogen fuel cell catalyst due to its ability to withstand high temperatures and complex chemical changes. It’s why the World Platinum Investment Council predicts that green hydrogen could boost annual platinum demand by up to 600,000 ounces by 2030.

Jubilee Metals trades on a forward P/E ratio of just 8.6 times today. Worsening economic conditions could hit demand for its semi-cyclical products hard and Jubilee’s profits too. But all things considered, I believe the possible rewards of me owning this penny stock far outweigh the risks.

Royston Wild 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.

Scottish Mortgage Investment Trust (LSE: SMT) has been one of the biggest UK stock market winners over the last decade. The SMT share price has risen by 780% over the last 10 years, compared to a gain of around 35% for the FTSE 100.

Of course, past performance is no guarantee of future gains. However, I like Scottish Mortgage Trust’s strategy and I think there’s a good chance it could continue to do well. That’s why I’m considering taking advantage of the trust’s recent share price slump to buy SMT for my portfolio.

What’s going on with the SMT share price?

The Scottish Mortgage share price has fallen by around 25% since hitting a record high of 1,568p in November. A 25% drop is a hefty loss, but I think it’s worthwhile keeping this in context.

SMT shares are still worth 90% more than they were two years ago. And the stock has only fallen by 10% over the last 12 months. After such rapid growth, I’m not surprised to see Scottish Mortgage shares pulling back.

My only concern is that much of the trust’s growth since 2020 has been driven by the sharp rise in tech and pharma stocks such as Moderna, Tesla, Tencent, and Nvidia. Many of these shares have been falling in recent weeks. But some valuations still look quite full to me.

I think it’s possible that some of SMT’s holdings could have further to fall. If they do, they could take SMT’s share price down lower, too.

Forget the short term, I’m looking at the next decade

However, I see this as a short-term risk only. Scottish Mortgage says its strategy is focused on “five year time frames, preferably much longer”.

I’m interested in buying this stock for my retirement portfolio. That means I’m looking 10-20 years ahead. On this time frame, I’m very attracted to Scottish Mortgage. The reason for this is that the trust does something I can’t do myself, even though I am an experienced investor.

Scottish Mortgage’s focus on “global technological change” means that it researches and invests in businesses all over the world. In addition to stock market investments, the trust also invests in privately-owned companies.

Not all the trust’s picks are successful, but some of the big winners are very big indeed. SMT invested in Tesla at around $7 (adjusted for a stock split) in January 2013. Nine years later, Tesla’s share price is around $1,000. SMT has sold much of its Tesla holding, but is still one of the EV pioneer’s largest shareholders.

Scottish Mortgage: one final thought

Scottish Mortgage uses some borrowed money to try and increase its shareholder returns. The trust recently secured $400m of new lending. These loans have an interest rate of about 3% and won’t need to be repaid for between 30 and 40 years.

Normally, I’d only expect huge global businesses to be able to borrow cheaply for such long periods. This suggests to me that the trust’s lenders are very confident in Scottish Trust’s long-term prospects.

That’s a view I share. I don’t have a strong view on the outlook for SMT over the next year. But over the next decade, I feel that the trust’s long-term strategy is likely to continue delivering attractive returns.

For this reason, I’d be happy to start building a position in SMT for my portfolio today.

Roland Head 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.

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