It’s been a crazy week on global stock markets. The FTSE 250 Index fell 9% in recent days to sit as low as 17,890 points but recovered strongly after US President Donald Trump’s tariff pause to sit at 18,570 as I write on April 11.

The market moves caused by the ‘Liberation Day’ tariff announcements mean many companies making up the UK mid-cap index have suffered sharp share price falls — and one online retailer in particular has caught my eye.

Beaten down FTSE 250 retailer

ASOS (LSE: ASC) is the company in question. The online retailer has seen its share price plummet 37% since the start of the year to 274p per share as I write.

The company’s market cap is sitting around £327m — a far cry from the £530m valuation held as recently as December. So, what’s put the company’s share price under so much pressure?

Fierce competition

Online fast-fashion is a tough business. The FTSE 250 company built its success on rapidly producing fashion garments for consumers but the nature of the game can quickly change.

One big factor weighing on the company’s share price of late is the explosion in popularity of other, lower-cost fast-fashion e-tailers such as Shein. Higher cost-of-living pressures are also a factor as consumers watch their purses a little more closely.

This has hurt sales and profitability, with the company’s revenue falling 18.1% in 2024 to £2.9bn as sales declined across all geographies.

Operating losses also widened by 33% during the year from £248.5m in 2023 to £331.9m last year. I wouldn’t expect to see any dividends from the online retailer any time soon.

The share price has been under pressure in recent days as investors weigh the impact of proposed tariffs on China — a key part of ASOS’s supply chain.

To buy or not to buy?

You may have heard the phrase: “Don’t try to catch a falling knife”. This is when investors try to buy the dip in a falling share price, only for it to fall further and cause more losses.

The company’s share price was already under significant pressure before the tariff announcements. Fierce competition in a consumer-facing industry makes ASOS a tricky stock to value at present.

However, if the company can implement cost-cutting measures and boost profitability, I think it could turn things around. Online retailing is a fast-moving game, and the ability to spot trends and maintain a low-cost and agile operating model is key.

There’s also the chance that the company could be a beneficiary if it can navigate the impact of the tariffs by shifting production and focusing on key growth markets.

One other potential carrot dangling in front of investors is the company’s rumoured status as a takeover target which could attract a premium bid from potential suitors.

My verdict

I personally think the challenges facing the company outweigh the potential opportunities. While the recent share price declines has pushed ASOS’s valuation lower, opportunities in non-cyclical industries like pharmaceuticals are of higher priority for me at present.

It could be one to keep on the watchlist and revisit once the valuation has stabilised and there are signs of a clear pathway to recover sales and profitability in the future.

In today’s tumultuous economic environment, building a second income is more important than ever. Markets are in turmoil, politics are getting heated and the future is uncertain at best.

When looking at some of the political developments unfolding this week, it’s hard to be positive about the future. Having a financial safety net may soon become a necessity — not just a luxury. 

But passively sitting back and waiting for it to happen won’t help. What I really need is my money passively sitting in an investment account and paying me dividends.

So how can that happen?

For many, the idea of extra earnings conjures thoughts of side hustles, freelancing, or part-time work. But I think one of the easiest ways to grow a second income is through investing in quality stocks.

And the good news? Getting started doesn’t require a small fortune.

The power of compounding dividends

Investors looking to build passive income often turn to dividend shares as the first port of call. These are companies that pay out a portion of their profits to shareholders on a regular basis — often quarterly or annually.

Let’s say an investor puts just £200 a month into a portfolio of dividend-paying shares. That might not sound like much, but thanks to compounding — reinvesting dividends to buy more shares — it can snowball over time.  Assuming a realistic 7% annual return from high-yielding stocks, that regular investment could grow to over £34,000 in 10 years. Stretch that out to 25 years and it could balloon to over £160,000.

At that point, withdrawing the dividends would give the investor almost £1,000 a month of passive income. Sure, today’s economic issues may be long gone in 25 years. But some of the wealthiest income investors of today probably started their journey after the dot-com bubble burst in 2000.

History has a tendency to repeat itself so no matter how long it takes, it’s never a bad time to start.

Shares to consider

Well-established FTSE 100 companies like Legal & General (LSE: LGEN), Unilever, and Phoenix Group have a strong track record of paying reliable dividends. By building a diversified portfolio of such companies, it’s possible to earn regular payouts that can either be reinvested or taken as income.

Take Legal & General, for example. It’s one of the UK’s largest financial services firms, providing pensions, insurance, and investment management. Crucially, for income investors, it offers an attractive dividend yield — currently hovering around 9% — and has a strong track record of returning cash to shareholders.

One big advantage is the company’s stable, cash-generative business model. It benefits from long-term trends like ageing populations, which drive demand for retirement products and life insurance. It also has a sizeable investment management arm, which adds an element of diversification.

However, there are some drawbacks. It operates in a highly regulated industry, which can limit flexibility and lead to higher expenses for compliance. It’s also sensitive to interest rates and market volatility, both of which can impact asset values and customer behaviour.

When it comes to building a second income through dividends, investors must weigh up the risks and benefits. Compared to other options, I find this simple approach attractive — but only for those with patience and a long-term outlook.

The ‘Magnificent 7’ stocks have bounced off their lows. When Donald Trump announced a 90-day pause on tariffs earlier this week, share prices in this area of the stock market jumped. The thing is, many of these growth stocks are still well below their highs and currently ‘on sale’. With that in mind, here are two Mag 7 stocks that I believe are worth considering today.

A ‘generational’ buying opportunity?

First up is Nvidia (NASDAQ: NVDA). It’s currently trading for around $108, roughly 29% below its all-time high of $153.

This stock looks really cheap right now. At present, it sports a price-to-earnings (P/E) ratio of 25.

That’s low relative to the company’s earnings growth. This year, Nvidia’s earnings are expected to jump 52%, so the price-to-earnings-to-growth (PEG) ratio is only 0.48 (a ratio below one typically signals that there’s value on offer).

It’s worth noting that one well-known Wall Street analyst recently stated that Nvidia is offering a ‘generational’ buying opportunity at the moment. This analyst’s view was that trillions of dollars are going to be spent on artificial intelligence (AI) in the next few years, and that Nvidia – which develops AI chips – will be one of the primary beneficiaries of this spending.

I agree that a lot of money will be spent on AI. Recently, Google-owner Alphabet (NASDAQ: GOOG) said that it’s going to spend $75bn this year alone.

Of course, a global recession could change the outlook here. This would most likely result in companies spending less on technology in the medium term.

Taking a five-year view, however, I think this stock has a lot of potential. After all, AI is most likely here to stay.

The cheapest Mag 7 stock

Speaking of Alphabet, I think this Mag 7 stock is worth considering too at current levels. It’s trading for around $155 – about 26% below its all-time high of $209.

This is another stock that looks cheap. In fact, it’s the cheapest among the Mag 7.

Currently, the forward-looking P/E ratio is just 18. This falls to 15.8 using next year’s earnings forecast.

These multiples strike me as a great value. This is a company that operates in many growth industries including digital advertising, AI, cloud computing, self-driving cars, and streaming (it owns YouTube), so it has a lot of long-term potential.

That said, there are a few risks to be aware of. One is disruption to its search business from ChatGPT. For 20 years, Google pretty much had a monopoly on search. However, the way we look for information is now changing rapidly due to generative AI.

Another risk is economic weakness. This would most likely result in less advertising spending globally, which would hurt Google’s and YouTube’s revenues.

Weighing up the risks with the potential rewards though, I like the set-up. I think this stock has the potential to generate solid returns in the years ahead.

One UK stock after another in my portfolio has tumbled in the last few turbulent days but investment company 3i Group (LSE: III) has held the line.

It’s down just 6% over the last month, which I think is pretty decent, given the chaos caused by Donald Trump’s tariff threats.

Look back a little further, and it’s frankly magnificent. The shares are up 30% in the past 12 turbulent months, and a staggering 365% over five years. That makes them second only to Rolls-Royce.

Can this FTSE 100 star keep shining?

The FTSE 100-listed private equity specialist never really attracts much attention from private investors. That’s their loss. I’m thrilled I took a chance on it.

Yet in recent months, I’ve been having debating whether to bank some of my profits. After its winning streak, it’s now the biggest individual stock in my self-invested personal pension (SIPP), making up more than 10% of the total. So what’s the issue?

A huge chunk of 3i’s success comes from just one company, European discount retail chain Action, which it bought in 2011. Back then, Action had just 250 stores.

Today, it’s closer to 3,000 and 3i reckons it can increase that to 4,850 locations. It’s been a powerhouse, with sales up another 22% last year to €13.78bn and operating earnings climbing 29% to €2.08bn.

But nothing grows forever, and I do worry what happens if Action starts to slow down, even a little. It would hardly be surprising, given the fragile state of the European economy. Although maybe being a discounter helps.

Action now accounts for around three-quarters of 3i’s total assets, so it really is carrying the show. The board says the rest of its holdings are “resilient”. That’s fine in today’s challenging times, but hardly thrilling.

Low yield but bags of growth potential

Another worry is the price. The investment company trades at a whopping premium of 45% to the value of its net underlying assets, which would normally scare the beans out of me. But when the business is this strong, maybe that’s fair.

The 1.8% yield is nothing special, but it’s covered more than eight times by earnings. So there’s room to grow. And if 3i ever decides to cash in its Action stake, shareholders could be in for a treat.

The analysts are still upbeat. Of the nine offering a 12-month forecasts, the median target is 4,361p. That’s about a 12% lift from today’s price. Not spectacular, but respectable. Of course, these days forecasts are even more guesswork than they were.

Still, out of 10 brokers, seven say Strong Buy, two say Buy, and just one sits on the fence. No one’s calling it a Sell, which says something.

So despite the concentration risk and the premium price tag, I’m sticking with it. 

What I thought was a risky stock barely flinched during recent stock market volatility, and given that its track record stretches back to 1945, there may be a good reason for that. Investors considering 3i must look past its stellar past performance though. Sheer size means Action simply can’t keep growing at the same speed, but like those analysts, I’m not selling.

After falling sharply following ‘Liberation Day’ announcements, the stock market has been surging after news of a 90-day pause. But what happens after that?

As things stand, the tariffs that sent share prices down sharply are set to return. So investors need to think about what to do to prepare themselves and their portfolios.  

The current situation

Where the stock market goes in July depends in large part on how negotiations between the US and its trading partners go between now and then. And investors have a few options available.

One approach is to wait and see if share prices fall again, presenting another chance to buy at a discount. The trouble is, if negotiations go well, this might not happen. 

An alternative strategy is to buy while the market’s rising and look to take advantage of the recent momentum. But if negotiations go badly, this might prove to be a mistake. 

Attempting to predict what might happen over the next 90 days looks very risky. Fortunately, I don’t think this is the most important thing for investors to consider right now.

Long-term investing

Ultimately, what investors need to focus on is how much cash a company is going to generate. And while tariffs are an important part of this, they’re not the only thing that matters.

Diageo (LSE:DGE) – a stock I’ve been buying recently – is a good example. Its biggest-selling product is Johnnie Walker – a scotch whisky – which means tariffs are a genuine risk.

Unlike Apple or Nike, Diageo can’t start producing scotch whisky in a different country. So it’s going to have to work around whatever the trade agreement between the UK and the US is. 

Investors need to account for this, but it’s not the most important thing. Things like the company’s market position and long-term trends in alcohol consumption matter much more. 

Outlook

I think Diageo shareholders have a lot to be positive about. Younger consumers might be spending less on alcohol, but the spirits category has been relatively resilient.

On top of this, the firm’s competitive advantages are still firmly in place. One of these is the scale of its distribution network, which puts it in a position to acquire smaller competitors.

A good example is Casamigos – the tequila brand founded by George Clooney. Diageo paid around $1bn for the business, which is a lot, but it’s an investment that’s worked out well.

While the company retains its ability to make deals like this successfully, I think it looks like an attractive stock. And this is what investors need to focus on.

Tariffs

If trade negotiations go badly, the stock market could crash in July. But investors should think about what this means for corporate profits, rather than share prices.

The Diageo share price has gone from £20.55 to £19.17 and back to £20.82 over the last week. There might be more volatility on the way, but I think the long-term outlook’s positive.

The company does business in around 180 countries, so it’s no stranger to import taxes. While the outlook for the share price might be unclear, I like it for myself and see it as a long-term investment for others to consider.

Investing in Stocks and Shares ISAs can be a powerful way to build wealth and achieve millionaire status over time. And one of the most important tools in an investor’s arsenal is diversification. Diversification helps mitigate risk by spreading investments across a range of asset classes, sectors, and geographies. Rather than relying on the performance of a single company or industry, a well-diversified portfolio balances exposure so that losses in one area can potentially be offset by gains in another. 

Investment trusts

Investment trusts offer built-in diversification by holding a wide range of global companies across different sectors and regions. They also trade like regular shares making them easily accessible. While there are many investment trusts to choose from, two of my favourites are the popular Scottish Mortgage Investment Trust (LSE:SMT) and The Monks Investment Trust (LSE:MNKS). Both are managed by Baillie Gifford and have a strong track record of delivering for investors. They both also offer global exposure.

What’s so great about Scottish Mortgage?

Scottish Mortgage is well known for identifying exceptional growth companies across public and private markets. It offers long-term investors exposure to innovative firms like Tesla, SpaceX, and Nvidia, and its unconstrained approach enables investments in emerging sectors and unlisted companies, making it a compelling choice for growth-oriented portfolios.

However, the portfolio carries notable risks. Its heavy reliance on volatile tech stocks makes it susceptible to market downturns and cyclical pressures, particularly during economic slowdowns or geopolitical instability.

What’s more, the trust employs gearing (borrowing to invest), which amplifies returns but also increases losses when investments underperform. And this explains why the trust is down 30% since its year high in early February.

Furthermore, its significant exposure to private companies introduces liquidity risks, as these assets can be difficult to sell during adverse market conditions.

Nonetheless, the trust’s long-term performance remains strong with the share price increasing threefold over the past decade. It might be volatile, but personally I’m willing to endure the blips. That’s why I’m continuing to top up.

Monks Investment Trust lags slightly behind

The Monks Investment Trust lags its larger peers slightly in terms of shareholder returns. The share price has doubled in value over the past decade, but like Scottish Mortgage, has fallen considerably over the past month.

The Monks Investment Trust invests in innovative companies across sectors and regions, including tech, healthcare, and emerging markets. Its strategy balances risk by categorising investments into Stalwart, Rapid, Cyclical, and Latent growth opportunities.

It also carries risks. Its exposure to overseas securities makes it vulnerable to currency fluctuations. Likewise, the use of gearing amplifies potential returns but increases losses during downturns.

However, I’m actually quite bullish on its top five holdings, Meta, Microsoft, Nvidia, Amazon, and TSMC. These are some of the stocks experiencing a lot of pain right now, but I still believe in their long-term potential.

I’ve recently added this trust to my daughter’s SIPP. I may add it to my own portfolio soon.

The long game

Past performance is not indicative of future prospects. However, I do believe these two trusts offer a diversified offering to propel a Stocks and Shares ISA. And if Scottish Mortgage continues to triple in value every decade, well, it’s not hard to see how millionaire status could be reached.

Greggs‘ (LSE:GRG) share price has made many retail investors a lot poorer over the last year. However, I never quite understood its popularity, and certainly didn’t understand why a sausage roll-maker was trading for 25 times forward earnings.

However, it’s returned to earth with a thump, shedding 37% of its value over 12 months, and even more from its peak. The stock’s now trading at 13 times forward earnings. This is definitely seems more reasonable, although I have some concerns about its capacity to hit this target in 2025.

What’s more, its forward dividend yield’s 4%. That’s not an insignificant figure and it may complement the portfolio of an income-focused investor.

Growth’s slowing and it’s reaching saturation point

Greggs is facing a slowdown in growth as it nears market saturation. After years of rapid expansion and double-digit sales increases, like-for-like sales grew by just 1.7% in the first nine weeks of 2025. That’s down from 2.5% in late 2024. The company blamed the weather for lower footfall.

However, this deceleration has raised concerns among analysts about whether Greggs’ UK market is reaching its limits, particularly as the chain now operates over 2,600 outlets, with plans for another 140-150 openings this year.

The ’Food on the Go’ market is stagnating amid weaker consumer spending. What’s more, Greggs faces challenges balancing affordability with rising costs. Inflationary pressures and higher input costs have forced price hikes, potentially alienating its value-conscious customer base.

Moreover, with only 27,000 potential customers per outlet — one of the lowest among competitors — analysts an Panmure Liberum suggests oversupply could be an issue in regions like northern England and central Scotland.

The CEO disagrees. Roisin Currie believes the brand’s underrepresented in some areas. Personally, and anecdotally, I’m not sure if that’s the case.

Maturing into a dividend stock

On paper, with revenue slowing, the stock slumping, and the dividend yield rising, it may be argued that Greggs has, rather quickly, matured into a dividend stock.

The dividend payments will increase modestly over the medium term, according to the forecast, and dividend coverage is around two times. In other words, the company’s distributing around 50% of earnings to shareholders. This is broadly considered to be a sensible and sustainable ratio.

With this in mind, it could now be a desirable investment for investors looking for passive income, or drawing on a pension. The yield’s modest, but broadly and despite my concerns about the longevity of its expansion, the business is healthy.

However, it’s still not the type of investment I’m looking for. I’m unconvinced by its economic moat, and in the same way I wouldn’t invest in tobacco stocks, I’m not too keen on pastries and baked goods. They’re not good for us, and regulation could account for that in the future.

FTSE 100 retailer Tesco (LSE:TSCO) has seen its share price drop sharply in recent weeks. Yet someone who made a lump sum investment in the business a year ago would now still be sitting on a tidy profit.

At 315.7p per share, Tesco shares were recently dealing 12% higher than they were 12 months ago. It means that someone who invested £10,000 in the supermarket chain back then would have seen the value of their holdings rise to approximately £11,197.

On top of this, our investor would have received dividend income of roughly £443 in that time.

Signs of growing competition are a troubling omen for Tesco’s share price going forwards. Indeed, the grocer said as much on Thursday (10 April) when it warned profits would drop this financial year.

But then the firm’s strong operational performance of late suggests it may withstand the worse of such pressures. So can Tesco shares bounce back from recent weakness, and should investors consider buying the business for their portfolios?

Recent resilience

Food competition has always been fierce in the UK. It went up several notches after the 2008 financial crash, when cost-conscious shoppers flocked to discount chains Aldi and Lidl and sparked a rapid programme of expansion.

Yet despite this ongoing problem, Tesco’s position at the top of the tree has never been under threat. In fact, last year market share improved 67 basis points to 28.3%. Over the Christmas period, it rose to its highest level since 2016.

To put this in context, the market share of second-placed Sainsbury’s sits way back at 15%-16%.

Tesco’s has some really powerful weapons that it’s used to great effect to defend its position, like a huge online grocery operation and significant brand power. It also operates the gigantic Clubcard reward scheme, which keeps millions of loyal members streaming through its doors with special deals and coupons.

These factors drove Tesco’s revenues 3.5% higher in the 12 months to February, Tesco said this week. Consequently, adjusted operating profit jumped 10.6% year on year.

Under pressure

Yet while Tesco’s recent resilience has been impressive, I haven’t been tempted to buy its shares for my portfolio. I feared that it was a matter of time before it started having to fight fires again. This week’s trading statement has confirmed my suspicions.

Despite last year’s profits bounce, Tesco’s warned that “we have seen a further increase in the competitive intensity of the UK market” in recent months. And so it predicted adjusted operating profit would drop to between £2.7bn and £3bn in financial 2026, down from £3.1bn last year.

The increased strain Tesco’s recently felt could get much worse, too, as Asda prepares to overhaul its pricing strategy. Britain’s third-biggest grocer is about to launch its deepest price cuts for 25 years, a move analysts think could see it undercut its major rivals by as much as 10% on some goods.

At the same time, Aldi and Lidl plan to cut the ribbon on hundreds of new stores over the next several years, potentially adding further strain to Tesco’s weak margins. These were up last year but still too thin for comfort, at 4.5%.

I think Tesco’s share price could keep sinking as the reality of its tough trading landscape becomes clearer. So I’d rather buy other stocks for my portfolio.