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Last year was a brutal one for many investors. Inflation soared and prompted central bankers to wield their financial plumbing tools. This brought an unusual period of near-zero interest rates to an end, resulting in market volatility. But I think the sell-off of some shares has thrown up a few exciting opportunities. So here’s my 3 best stocks to buy this year.
Once-in-a-decade opportunity
Investors have historically been rewarded after buying major dips in Scottish Mortgage Investment Trust (LSE: SMT).
| DATE | PRICE | PEAK-TO-TROUGH DROP |
| March 2000 | 98p | |
| February 2003 | 46p | -53% |
| May 2008 | 137p | |
| November 2008 | 51p | -62% |
| November 2021 | 1,515p | |
| January 2023 | 721p | -52% |
Each time Scottish Mortgage shares have crashed by more than 50%, they’ve recovered and gone on to record new highs. Obviously past performance is no guide to future returns, but I think the trust looks in great shape moving forward.
The top position in the portfolio today is vaccine developer Moderna (NASDAQ: MRNA). The managers think that its mRNA platform has the potential to be applied to diseases far beyond Covid.
That hypothesis got a boost recently, as the company released promising data from its stage 2 trial for an experimental cancer vaccine. Obviously, it’ll still be years (if ever) before this treatment gains commercial traction.
Yet Moderna has $17bn in cash and investments with which to fund its 35 active clinical trials. I think the stock has immense long-term potential.
The risk to Scottish Mortgage stock is that market sentiment towards growth stocks remains negative. However, with the shares down 50%, I’m ready to add to my holding soon.
Ageing global population
Intuitive Surgical (NASDAQ: ISRG) is perfectly positioned to ride one of the greatest investment trends of the 21st century: an ageing global population. By 2050, the world’s population of people aged 60 years and older will double to 2.1bn, according to the World Health Organization (WHO).
That means there’s going to be increasing pressure on health services for various types of surgeries. That bodes well for Intuitive Surgical, the global leader and pioneer of robotic-assisted surgical systems.
At the end of September, the firm had more than 7,300 of its high-tech da Vinci systems installed in hospitals worldwide. These machines cost upwards of $2.5m and surgeons undertake lots of training to use them.
So once these robots are in, they’re normally in for good. It’s rare that a healthcare setting switches to a rival system, for reasons of safety and also the headache (and cost) of re-training surgeons.
Robotic-assisted surgery has been proven to reduce the risk of infection and complications. There’s less scarring because of smaller incisions and fewer sutures. This results in faster recovery times, which means healthcare providers save money because patients are released quicker. That’s likely to remain an attractive selling point as ageing populations put pressure on hospital waiting lists.
The company makes the bulk of its profit from selling the instruments (or consumables) needed to continue operating its systems. So one risk here is the potential of another Covid outbreak, which would result in surgical procedures being postponed. This would impact short-term profitability.
The stock is down 27% over the last year. So I recently seized the opportunity to top up my holding.
