With analysts confident that we’ll (finally) get the first of several interest rates cuts this summer, I don’t think it’s any coincidence that the FTSE 100 recently set a new all-time high.

I also reckon it could be just the start as investors become increasingly willing to back previously-shunned growth stocks.

Ready to fly

One example of a top-tier member that might soar if/when interest cuts are announced is Scottish Mortgage Investment Trust (LSE: SMT).

Despite rising 30% in the last 12 months (no doubt helped by having a good dollop of its assets invested in Nvidia), the Baillie Gifford-run fund is still roughly 40% below the all-time high hit back in November 2021. I believe it will eventually recover this ground and then some.

One reason for this is that the fund is heavily focused on owning the sort of stocks that could deliver explosive returns in time.

That last bit is key. In their formative years, growth companies usually require cash — in the form of debt — and lots of it. As a rule of thumb, debt is anathema to investors in a high interest rate environment. But this burden becomes easier to service as rates fall, hence why I’m so bullish.

Still great value

It’s not quite a slam dunk though. An ongoing concern I have is that Scottish Mortgage is overly-invested in private companies. These are harder to value in the conventional sense. So, there’s a chance that the trust has overpaid to get exposure.

On a more optimistic note, getting in early could prove to be a masterstroke if (and that’s a whopping ‘if’) some of these companies were to go public as economic forecasts improve.

Meanwhile, the trust trades at an 8% discount to its net asset value. That’s not as high as it once was. However, I still consider it to be a great price for what might be a stonking return down the line.

Already the second-largest holding in my Stocks and Shares ISA, I intend to continue adding to my position.

Contrarian stock

Luxury fashion firm Burberry (LSE: BRBY) could also deliver stellar returns for patient contrarians like me.

That might seem like an outlandish claim as things stand. A number of poorly-received trading updates — brought about by the cost-of-living crisis — have caused the company’s value to more than halve in just 12 months. Yikes!

Things might get even worse. Back in May, the company announced that pre-tax profit for the year to 30 March had tumbled 40% to £383m. I doubt business has miraculously bounced back since, especially in key markets such as China.

Takeover target

So, is Burberry doomed? I doubt it. This is a company that’s been around since 1856. You don’t get to stick around for that long without encountering the odd wobble in consumer sentiment.

No, the question I’m asking is how much bad news is now priced in. With the shares sitting at a 12-year low, I’d say quite a lot. In fact, I think there’s a clear and present danger that Burberry could be acquired by a deep-pocketed suitor if CEO Jonathan Akeroyd can’t steady the ship.

I’m going to reassess the company after July’s (probably woeful) trading update. But I do think the risk/reward trade-off is increasingly compelling.