Here are 2 reasons why investors should consider buying Scottish Mortgage shares

It has been a transformative year Scottish Mortgage Investment Trust (LSE: SMT). Despite its shares being up 4.5% year to date, that doesn't paint the full picture.

The stock has experienced peaks and troughs this year. The latest was a 5% dip at the end of August.

But now sitting at £8.23, I think it may be time for investors to consider buying the trust. Here are two reasons why.

Trading at a discount

The first reason is that it looks cheap, even after the increase this year. I say that because it trades at a discount.

By that, I mean that the market price of the trust's shares is lower than the net asset value (NAV) per share. As I write, Scottish Mortgage is trading at a 10.3% discount to its NAV.

In theory, that means I can buy stakes in companies Scottish Mortgage owns cheaper than their market value. To me, that sounds like a pretty good deal.

The management team is aware of this and has implemented measures to reduce the discount. For example, it recently revealed plans to buy back £1bn worth of shares over the next two years. To date, it has bought more than £300m worth.

Interest rates

The second reason is the interest rate. We've seen prices rise over the past few years. However, with inflation starting to come down, market watchers are hopeful that we will see them come down in the near future. We have already seen this in action, when the Bank of England cut the base rate by 0.25% to 5% in August. Across the pond, the Fed recently cut rates by 0.5%.

At its latest meeting, the Bank kept the base rate at its current level. However, I expect to see more cuts this year, and at this point, it seems very likely that we will see more cuts next year.

With Scottish Mortgage's focus on growing companies, the past few years have been a struggle. High rates are dangerous for these types of businesses as they are often financed by debt to fuel their growth. Higher rates mean that the debt is more expensive to pay off.

However, as prices fall, growth stocks should become more popular with investors again. That's good news for the trust.

And I think the trust's focus on growth stocks is exciting in itself. Other names it has include companies like Elon Musk's SpaceX. In the years to come, they have the potential to provide amazing returns.

Accidents

That said, SpaceX is a private company. These businesses can often be difficult to value. More than a quarter of Scottish Mortgage's portfolio consists of private equity, which is a risk to the stock.

That's because these companies can be taken to extremes. If they don't go public, their ratings can go down. That said, the reverse could happen, and its share price, as well as valuation, could rise.

Of course, another risk is a delay in future rate cuts. If we don't get as many cuts as expected in the coming months, that could see the stock pull back.

One thing to consider

But overall, I think Scottish Mortgage is a stock worth considering today. The trust looks like a great value, in my opinion. I intend to get more shares in the coming weeks.