The FTSE 100 and FTSE 250 moved sharply downwards on Thursday (3 April). The moves mark a reaction to new US tariffs, not just those imposed on the UK, but globally.

That’s because the UK’s largest-listed companies produce and operate globally, and not just in the UK. What’s more, this downward movement in shares is nothing compared to what we’re seeing in the US where pre-market activity indicates something of a selloff.

So where might investors find safety in the UK market? Here are two ideas to consider.

Jet2

Jet2 (LSE:JET2) shares appear highly undervalued, trading at just 0.85 EV-to-EBITDA, a figure that highlights the disconnect between its valuation and operational strength. Unlike many airlines, Jet2 benefits from a robust net cash position of £2.3bn, which is projected to grow to £2.7bn by 2027.

This liquidity provides a solid foundation for strategic investments and shields the company from macroeconomic shocks, including tariff risks, which Jet2 has minimal exposure to.

The airline’s plan to replace and expand its fleet is ambitious yet manageable, with annual capital expenditure of £833m aligning with industry norms at 11.4% of revenue for 2025. This ratio is expected to decline further as revenue grows to £8.6bn by 2027.

Jet2’s fleet replacement strategy focuses on operational efficiency, with newer Airbus A321neo aircraft offering lower fuel consumption and higher capacity, which could improve margins in the long run. In the short run however, we could see further downward pressure on oil and jet fuel prices following Trump’s tariffs.

There are risks. This includes the impact of higher National Insurance contributions, Minimum Wage growth, and increased landing fees. However, Jet2’s earnings are forecasted to grow steadily, with EPS increasing from £1.83 in 2025 to £2.08 in 2027.

For me, Jet2’s combination of cash strength and growth forecasts offer some degree of safety from the volatility. It’s also very cheap. That’s why I’m looking to top up.

AstraZeneca

AstraZeneca (LSE:AZN) — the largest company on the FTSE 100 — has emerged as a potential safe haven amid the fallout from Trump’s sweeping tariffs. According to a clarifying fact sheet from the White House, drugs imported into the US appear exempt from higher-rate reciprocal tariffs. This provides relief to pharmaceutical firms like AstraZeneca and GSK.

While uncertainty remains over whether the broader 10% baseline tariff could apply, AstraZeneca’s strong financial position and global pipeline suggest resilience. The company has reassured investors it is actively assessing the implications of the announcement but expects essential medicines to remain exempt.

AstraZeneca performed well in 2024, and its ambitious pipeline of new medicines and transformative technologies positions it for sustained growth, targeting $80bn in revenue by 2030. With no immediate tariff exposure and a catalyst-rich year ahead, AstraZeneca offers stability in turbulent markets.

However, it’s worth remembering that drug discovery is an expensive business, and many pipeline candidates never make it to market. What’s more, it’s slightly more expensive than some of its peers on a near-term basis. If earnings growth doesn’t materialise, the stock could pullback. Nonetheless, it’s one I’m topping up on.

Investors searching for passive income tend to focus on the same small pool of blue-chip stocks. FTSE 100 companies like Lloyds, Legal & General, National Grid and Shell in particular tend to dominate attention from retail investors.

Footsie shares such as these can be excellent for dividends, often supported by their market-leading positions in mature sectors and robust financial foundations. Yet investors who concentrate solely on UK large-cap stocks may be missing out on excellent investment opportunities elsewhere.

2 top income stocks

Take the following two dividend stocks, for instance. Each carries a large forward dividend yield that comfortably beats the FTSE 100 average of 3.6%. They also look in good shape to continue growing shareholder payouts beyond the near term and I feel they’re worth considering.

Dividends are never, ever guaranteed. But if City forecasts for these companies prove accurate, a £20,000 investment spread equally across these three shares will provide a passive income of £1,360 this year alone. That’s based on an average yield of 6.8%.

Brilliant bank

Lion Finance isn’t as popular as the FTSE 100’s high-yield banks. But its dividend yield for this year is far ahead of those of any of the UK’s blue-chips like Lloyds, NatWest and Barclays.

With a CET1 capital ratio of 17.1%, the FTSE 250 company looks in good shape to hit this year’s dividend forecasts too.

Looking further out, I feel that Lion Finance’s focus on the Georgia’s booming banking market will allow it to keep delivering sector-beating dividend growth. The total payout rose 12.5% year on year in 2024, driven by a 31.2% improvement in pre-tax profits.

Be aware though that fierce competition could impact future profits. TBC Bank and its huge investment in digital banking in particular poses a not-insubstantial threat.

Top fund

As I say, dividends are never a sure thing. Even companies with decades of income stability behind them can falter when internal or external pressures emerge. This was certainly the case with Shell, which cut cash rewards for the first time since 1945 during the pandemic.

Investors can reduce the impact of such events by buying an exchange-traded fund (ETF) like the iShares EM Dividend ETF. With holdings in 115 different businesses, it still has the strength to provide large dividends even if one or two holdings disappoint.

As the ‘EM’ in its name implies, this particular fund invests in emerging market companies with enormous dividend yields. It has especially substantial holdings in Brazil and China, with other prominent territories including Indonesia, India and Poland.

One potential drawback in the near term is its high exposure to cyclical shares. Major holdings include energy companies (like Petrobras) and financial services businesses (including China Construction Bank).

Yet over the long term, I’m optimistic it could deliver excellent returns, thanks to its developing markets’ rising wealth and growing populations.

Tesco (LSE:TSCO) shares recently saw a sharp spike followed by a subsequent decline. How is the stock looking now, as a potential investment to consider buying?

Note: return data correct as of time of recording.

Transcript:

CHRIS: Hi Fools, Chris Nials here and I’m joined by Motley Fool analyst Zaven Boyrazian. Morning Zaven!

ZAVEN: Hello!

CHRIS: We’re going to be talking about Tesco today, which was probably about as solid as a FTSE 100 share could get. But recent events have certainly shown that there are always surprises in store. Zaven, what’s been happening?

ZAVEN:  Well Chris, I don’t think it’s unfair to say that Tesco has been something of a “steady Eddie” for many UK investors over the past year or so, with its share price gaining around 25% between the end of February 2024 and Mid-March 2025. But as experienced, long term investors, we should have known better to assume that its resurgence would continue uninterrupted!

CHRIS: Yes indeed it’s certainly been a rocky week or so to say the least.  What’s been the driver of the slump?

ZAVEN:  So this all started on the 14^th of March and came from an unexpected source: its underpowered rival Asda. And despite Asda being the UK’s third-largest grocer with just a 12.6% market share, it’s suddenly spooked the entire sector. Tesco, by comparison, leads with 28.3%, but that hasn’t stopped its share price taking a hit.

Asda’s looking to revive its fortunes by slashing prices, even at the expense of denting short-term profitability. Some investors now fear another supermarket price war, which could hit margins across the sector.

Tesco shares slumped 6% on the day, as did Sainsbury’s. One week later, Tesco was down a hefty 12.97%. This meant that someone who had invested £10,000 just before this would be sitting on £8,703, a painful paper loss of £1,297.

Nobody likes to see a sudden drop in their portfolio. But the shares are still up 12% over the past year and 79% over five years, if you reinvested dividends. And I think it certainly has the resilience to recover from this blip, though it may take time. Though past performance is not an indicator of future results.

The wider economic climate remains tough though. Inflation’s proving sticky, consumers are feeling the pinch, and economic growth is slowing. Tesco will need all its strengths, such as scale, brand loyalty and operational efficiency, to weather the latest storm.

CHRIS: You mentioned a pretty heady stat there – a 79% return over the past 5 years if you’d reinvested the dividends, which would have certainly pushed its valuation up.  Has this dip perhaps made it more attractive to investors who perhaps have been watching on the sidelines, looking for a good point to consider buying?

ZAVEN: Well, in my opinion at least, the shares now look decent value with a price-to-earnings ratio of 13.7. The dip has also nudged its current dividend yield to a slightly more appealing-looking 3.73%.

And analyst forecasts still suggest that Tesco could have a stellar year. In fact, the predictions of 13 brokers forecasting Tesco’s one-year share price produces a median target of 410p. If that’s correct, that’s a potential gain of around 23% from today’s price.

But there are two very important things to consider with that. First of all, forecasts are very slippery things. And secondly, most of them were probably made before the Asda bombshell and could certainly be revised down.

But for me, Tesco’s recent tumble is a reminder that even the quote unquote “Steady Eddie” stocks can face short-term turbulence. And while I don’t expect a quick rebound, I still believe this dip presents an opportunity for long-term investors looking for a strong, market-leading company at a better price to consider.

Just don’t expect it to be plain sailing throughout. Investors must always expect short-term volatility and, in truth, that’s a good thing too. Because when shares dip, re-invested dividends could pick up more stock at the lower price.

CHRIS: Ok great – thanks so much for the insight Zaven.  Any final thoughts before we  sign off?

ZAVEN: We can’t ignore the threat of another pricing war. Like many retailers, Tesco operates with razor thin margins and downward pressure on pricing during a period of sticky inflation is a nasty combo.

However, it’s worth pointing out that this isn’t the first time a company has tried to take Tesco’s crown as industry leader. And with plenty of experience with competing against discount retailers like Aldi and Lidl, I think it would be a mistake to underestimate the retail giant.

CHRIS: Thanks so much again Zaven, and thanks so much to everyone watching. Fool on!

Among the shares of the blue-chip FTSE 100 index, very few offer a double-digit percentage dividend yield. But asset manager M&G (LSE: MNG) does. At the moment, the M&G dividend yield is a juicy 10.1%.

Not only that, but I think the dividend per share could grow over time, meaning the prospective yield is even higher than 10.1%.

Track record of dividend growth

Over recent years the company has grown its dividend per share annually.

Past performance is not necessarily a guide to what to expect in future though. The company has consistently said it aims to maintain or grow its dividend annually, but in practice no company’s dividend is ever guaranteed to last, let alone grow. Whether it does depends, among other factors, on a company being able to afford it.

Last year, the dividend per share grew 2% to 20.1p per share. That is modest growth, but it is still growth. The dividend for the full year cost M&G £478m. That was well covered by operating capital generation of £933m.

If the company can keep throwing off capital at that sort of level, as long as non-operating costs stay manageable, the M&G dividend looks supportable to me.

Concern about customer fund outflows

Still, whether that happens remains to be seen. One of the things that has concerned me about M&G’s recent business performance has been the trend for clients in its core business to take more out of its funds than they put into them. That is a risk to revenues and profits.

Last year, for example, there was a net outflow from M&G’s currently open funds of £1.9bn. The international institutional asset management business did fine on this score, seeing a net inflow of client funds. But its UK equivalent saw more cash go out the door than came in.

At £3.8bn for that line of business, the company pointed to an improvement over the previous year, when net outflows had hit £6.1bn. Still, that net outflow concerns me as it suggests that either customers are pulling money out of funds generally, or that they are switching from M&G funds to better-performing ones offered by competitors.

Neither would be good for M&G’s business, so I continue to keep a close eye on net flows into and out of M&G’s funds in trying to assess the health and trajectory of its business.

I’d happily buy!

Still, overall I think the business is in decent health. It has a proven model, large client base and strong brand that hopefully will help it keep bringing in new customers over time. That could help it resolve the problem of outflows from funds.

If an investor has spare cash to invest this April, I think they should comsider some M&G shares for their portfolios, with that juicy dividend in mind.

Growth stocks have an important place in my portfolio. Since I hope to have many decades left in my investing journey, it’s worth trying to identify companies with significant potential to turbocharge my long-term stock market gains. Buying steady dividend shares alone won’t cut the mustard.

However, not all growth stocks are created equal. Some might appear attractive at first glance, but on closer inspection, they raise too many red flags. After all, risk and reward are two sides of the same coin.

With that in mind, here are a couple of FTSE 250 stocks that I’m avoiding today.

Ocado Group

Once a FTSE 100 darling, Ocado Group (LSE:OCDO) was relegated to the FTSE 250 index last year. Frankly, the grocery technology business has endured a disastrous stock market performance lately. Ocado’s share price is down nearly 79% over five years.

The investment case for this growth stock sounds compelling on the surface. Ocado’s core offering — robotics and automation — has significant potential to boost supply chain efficiency. In the low-margin grocery sector, that’s an appealing proposition.

Plus, Ocado Retail has been Britain’s fastest-growing grocer for 11 successive months, according to Kantar. In FY24, this joint venture with Marks and Spencer delivered a 13.9% revenue improvement and expanded active customer numbers by 12.1%.

However, legal trouble’s brewing for the online food tie-up. M&S is withholding payment of a final instalment worth £190m due to Ocado’s failure to meet performance targets.

Ocado’s stated that it will consider using “all contractual or legal means” to maximise the amount payable if an amicable solution can’t be reached. Considering the firm’s never turned a profit and pre-tax losses were £374m last year, it can ill afford protracted litigation against a close partner.

With job cuts on the agenda and slower growth expected for the group’s technology solutions division in FY25, it’s hard to see the catalyst for an Ocado share price recovery. There’s no clear rationale for me to risk my money on the shares today.

Wizz Air

Another FTSE 250 growth stock I’m sidestepping is low-cost carrier Wizz Air Holdings (LSE:WIZZ). At £14.60, the airline’s current share price is almost exactly where it was a decade ago.

A strategy to capture market share via aggressive expansion makes Wizz Air a disruptive force in the airline industry. On the bright side, a substantial order book and robust balance sheet bolster the investment case.

That said, the share price faces further turbulence ahead. Problems with Pratt & Whitney engines, which the firm uses for its aircraft, mean 40 planes will remain grounded until 2026. That’s nearly 20% of its fleet. The result has been two profit warnings in six months, hammering investor confidence.

Furthermore, the addition of more exotic routes in Wizz Air’s expansion drive has come at a cost. For instance, the budget airline’s exposure to wars in Gaza and Ukraine has curtailed growth.

The business also doesn’t compare favourably to its rivals on some critical metrics. Wizz Air has negative free cash flow, whereas both easyJet and IAG boast positive figures. It’s also the only one of the trio that doesn’t pay a dividend. For me, this growth stock carries too much risk for too little reward.

A fair few FTSE stocks are down today (3 April) after President Trump’s so-called ‘Liberation Day’ event in the Rose Garden of the White House. There, he unveiled sweeping new tariffs on most products imported into the US from around the world.

There was a 10% baseline across the board, including on the UK, while it is 54% on China and 20% on the EU. The risk here is that these tariffs cause a spike in inflation and a global recession.

FTSE 100

As I type, the JD Sports Fashion (LSE: JD) share price is down 5.2% in the FTSE 100. This likely relates to its partnerships with major brands Nike and Adidas, which both have significant production concentration in China and Vietnam. Trump announced a steep 46% tariff on imports from Vietnam.

Adidas shares fell 10.7% today, while Nike is down over 8% pre-market in New York. The newly imposed tariffs will likely increase production costs for these companies, potentially leading to higher wholesale prices for retailers like JD Sports. 

The UK firm is already struggling to grow in the face of inflation-weary consumers and widespread discounting of sportswear. JD’s sales could now come under further pressure.

On the plus side, the stock already appears dirt cheap after falling more than 50% in six months. It’s trading at just 5.8 times forward earnings. Even if forecast earnings come in light, the stock still wouldn’t be overvalued, in my opinion.

Therefore, it could have great rebound potential at some point, assuming the company can weather these storms and resume growth.

Other sliders

Elsewhere in the blue-chip index, Ashtead shares slumped 4.9%. The company is the second-largest equipment rental firm in the US, so the fear here is that America will now slip into a recession. That obviously wouldn’t be great for construction activity.

Asia-focused banks HSBC and Standard Chartered are also down 5% and 7.5% respectively. The thinking is pretty much the same as above, but regarding an economic slowdown in Asian markets, where both banks have significant exposure.

Additionally, there could be regulatory targeting of Western banks in response to Trump’s tariffs, adding to investor uncertainty.

Finally, a few Footsie investment trusts fell today. Pershing Square Holdings is linked to Bill Ackman’s hedge fund, which has a significant holding in Nike. Its shares are trading 3.2% lower.

Scottish Mortgage Investment Trust and Polar Capital Technology Trust dropped 3.5% and 4.5% respectively. The disparity might be linked to Polar Capital’s large holding in Apple, which Scottish Mortgage doesn’t own.

Shares of the iPhone maker are down 6.8% in the pre-market as investors worry about how its sprawling supply chain across Asia will be impacted.

FTSE 250

Moving to the FTSE 250 index, Watches of Switzerland stock nosedived 10.7%. That’s because the company is a retailer specialising in luxury Swiss timepieces and the US also imposed a 31% tariff on goods from Switzerland.

Some mid-cap investment trusts are also down, including VinaCapital Vietnam Opportunity Fund (-9.2%) and Vietnam Enterprise Investments (-7.3%). As the names imply, both are focused on Vietnam, which is going to be hit hard by tariffs.

All this shows the wide-ranging impact of yesterday’s announcement. There’s a lot for investors to unpick. But where there’s fear, there’s often opportunity.

In the long-running debate over which is better growth or value, growth investing principles have been the clear winner in the past 15 years. However, so far in 2025 the FTSE 100 and European stocks have stolen a march on the tech heavy S&P 500. As this rotation accelerates, I am following Warren Buffett’s principles to help me weather heightened stock volatility.

Momentum investing

We have all heard the drumbeat many times before: buy the dip and don’t worry when stocks fall, as they always bounce back. This simple strategy has worked over and over again. But what do you do when this strategy stops working?

I am sure you have all heard the pun that its not the fall that kills you; it’s the sudden stop at the end. Momentum investing is a bit like this – trying to avoid hitting the ground, as if one does it’s game over.

Rotation is coming

I genuinely believe that momentum investing is beginning to fade. The total dominance of US stocks recently is down to an infatuation with all things AI. As with the dotcom bubble before it, today any stock remotely connected with AI gets slapped on it a premium valuation.

One characteristic momentum investors don’t have is patience. How many of the private investors who piled into Nvidia after the release of DeepSeek shocked the world, are regretting their hasty move?

If the Magnificent 7 continue to underperform, I can see an eventual stampede for the exit.

I certainly don’t want to be around when that day comes. I am following Warren Buffett’s timeless principles. That means doing fundamental research and considering myself as a part owner of a business that I buy shares in.

A patient investor

The following, lesser known, quote by Warren Buffett’s has had a profound effect on my investing strategy

“Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain. That is what we’re trying to do. It’s imperfect, but that’s what it’s all about.”

In other words, you don’t have to be right all of the time, you just have to be right about your big bets at the right time.

One business that has grown to become one of the largest weighting in my Stocks and Shares ISA is insurance giant Aviva (LSE: AV.). I have been slowly building my stake here over the past five years. This was despite the consensus among analysts at the time of my initial investment being that it was one to avoid. Its share price is up 140% since then.

What gave me the confidence to initially buy and then keep adding, as funds became available, was because I had done my homework. My research had uncovered long-term structural growth drivers. These included ageing demographics and a pension provision ticking time bomb. But these trends don’t play out over years but a decade plus.

Along the way unexpected turns have occurred that were not on my radar. For example, the purchase of Direct Line Insurance. I’m trusting the company has made the right move there. But I won’t sell out whatever happens to the share price unless and until my original investment thesis fundamentally alters. I let my winners run.

Next’s (LSE: NXT) share price is trading around a 12-month high. This follows a gain of 30% from its 25 July 12-month traded low of £86.03.

That said, it is largely irrelevant to my investment decisions how much a share price has gone up or down. The key factor I want in stocks I am buying for price gains is whether they have value in them.

To see if this is true for Next shares, I looked carefully at its business and ran some key numbers.

How does the business look at the moment?

The firm’s full-year 2024/25 results released on 27 March saw profit before tax break the £1bn barrier for the first time. More specifically, it rose 10.1% year on year to £1.011bn. This drove up pre-tax earnings per share by 11.6%, to 845.2p. 

All of this came after an 8.2% increase in sales over the financial year, to £6.321bn. Much of this resulted from the firm’s use of overseas third-party distribution networks. This has seen a 350% increase in sales of Next branded products through international websites over the last 10 years.

Also vital here has been that its online platform sells products that are not exclusively Next’s. In fact, 42% of the firm’s online sales in the UK are not Next branded products. This has allowed it to build a now very profitable fashion and homewares aggregation platform.

Consequently, Next upgraded its sales guidance for 2025/26 to 5% from 3.5%. It did the same for its pre-tax profit – by 5.4% to £1.066bn.

A risk here is a surge in the cost of living in the UK, which may deter customer spending. Another is the high degree of competition in its sector that may squeeze its margins going forward.

Indeed, analysts forecast annual average earnings growth of a relatively modest 4.5% to the end of 2027/28.

So is there value remaining in the share price?

I think price-to-earnings is a good starting point to work out whether a stock has any value left in it. On this Next trades at 17.4 against a peer average of 12.3. There are very many peers but I selected Abercrombie & Fitch at 6.8, Frasers Group at 8.9, Marks and Spencer at 14.2, and H&M Group at 19.4.

So, Next looks very overvalued on this comparative measure.

It looks the same on its 8.3 price-to-book ratio too compared to its competitor group average of just 2.8.

And it also looks very overvalued on its price-to-sales ratio of 2.2 against a 0.7 average for its peers.

A clean sweep of comparative overvaluations like this is not a good sign in a stock for me.

I ran a discounted cash flow analysis to ascertain what this means in share price terms. This shows Next shares are already at fair value level – implying no further value remains in them.

My decision

If Next was a stock with a dividend yield of 7%+ I would consider buying it. This alone could provide a good return for me on my investment. But its current yield is just 2.1% — nowhere near my minimum requirement.

And buying a stock with no value remaining — and low earnings growth potential — for a potential price gain is pure gambling in my view. So, Next is not worth my while buying now.

I think it’s fair to say that Diageo (LSE:DGE), the FTSE 100 stalwart, is currently producing one of the coolest drinks around. TBH (to be honest), I’m not a fan of Guinness. But millions of people are.

Ironically, given that the iconic drink’s an old-fashioned stout that’s been around since 1759, its Generation Z that’s making it popular. Thanks to a clever marketing campaign, and the emergence of so-called ‘Guinnfluencers’, sales have gone through the roof and the company’s been struggling to keep up with demand.

Apparently, celebrities such as Lewis Capaldi and Jason Momoa (who?) have played their part in making Guinness trendy. And I’m told ‘Splitting the G’ (no idea) has become something of a social media phenomenon.

Towards the end of 2024, the drink was so popular that keg sales were restricted in British pubs. And I’m sure St Patrick’s Day, the Cheltenham Festival and Six Nations rugby, have helped this trend continue into 2025.

But despite all this hype, the company’s most recent trading update was very gloomy. And Diageo’s share price has fallen 19% since the start of the year.

Drowning its sorrows

Although Guinness is doing well, many of Diageo’s other brands are struggling. For example, during the six months ended 31 December (H1 FY25), sales of gin and vodka were down 11% and 10% respectively, compared to H1 FY24.

Overall, Diageo reported falling sales volumes (-1%), revenue (-1%), operating profit (-5%) and earnings per share (-12%), compared to the same period in 2023. 

At least its net debt was also down, although at 3.1 times EBITDA (earnings before interest, tax, depreciation and amortisation), it remains above the group’s target range of 2.5-3.

Ominously, the accompanying press release said: “Medium-term guidance has been removed due to the current macroeconomic and geopolitical uncertainty in many of our key markets impacting the pace of recovery”.

Part of this uncertainty is due to President Trump’s on-off approach to tariffs (currently on). It’s hard to keep up but, at the moment, it looks as though Diageo will be affected. Of particular concern, it has factories in Mexico and Canada.

In good spirits

However, I believe there could be an opportunity to consider here. The stock’s price-to-earnings ratio is now around 15. Only three years ago, it was close to 25. If it was valued on the same basis today, its share price would be over 60% higher. By historical standards, this suggests the stock offers great VFM (value for money).

In addition, the stock’s now yielding 3.9%. Although there are no guarantees when it comes to dividends, at the moment it remains in the top third of FTSE 100 yielders.

Of course, when it comes to investing, it’s important to DYOR (do your own research).

However, IMO (in my opinion), I think the recent pullback in Diageo’s share price could make it an ideal stock for long-term investors to consider adding to their portfolios. I see no reason why the group couldn’t apply the Guinness blueprint to some of its other brands.

Having said that, I suspect there will be a period of volatility before Trump realises that a global trade war doesn’t benefit anyone. And if I’m right, economic growth – and alcohol sales – could then start to pick up again.  

TTYL (talk to you later)

XOXO (hugs and kisses)

The outlook for global growth stocks has become darker in 2025. The FTSE 100 and FTSE 250 have dropped 3% and 3.6%, respectively, during the last month as new trade tariffs have loomed. There’s a good chance they will head lower still.

Investors may be able to shield themselves from further market turbulence by purchasing shares at discounted valuations. Their low prices provide a margin of safety when faced with external challenges or internal setbacks

With this in mind, here are two growth shares to consider whose rock-bottom prices could offer resilience for investors.

NCC Group

While the broader index has dropped in recent weeks, cybersecurity specialist NCC Group (LSE:NCC) has actually risen in value despite elevated market tension. It’s gained 5.1% in value over the past month.

This in part reflects the essential service it provides. NCC supplies incident response, technical assurance and consulting services to protect businesses against cyber attacks. As the digital economy grows and the number of malicious online events increases exponentially, spending on internet security is essential rather than a luxury, providing the business with profits stability.

Yet this FTSE 250 firm is far from boring. I think it has considerable growth potential, even though it faces competition from US operators (like McAfee) which have better brand power and deeper pockets.

City analysts think NCC’s earnings will rise 53% for this financial year (to May 2025), and by another 30% in the following fiscal period. This results in what I consider a reasonable price-to-earnings (P/E) ratio of 26.3 times for the current financial year.

By comparison, the forward P/E ratio for the broader S&P 500 information technology sector stands at 34.3 times.

Additionally, NCC’s sub-1 price-to-earnings growth (PEG) multiple of 0.7 ratio for financial 2025 suggests excellent value.

Babcock International

European defence companies like Babcock International (LSE:BAB) are vulnerable to a drop in US arms budgets right now. They are also at risk of supply chain problems that impact hardware deliveries.

However, it’s crucial to recognise the substantial opportunities these businesses also have, as other NATO members rapidly rearm to compensate for declining US spending. I believe this particular FTSE 100 operator could be better placed than many of its peers too.

Not only does Babcock generate most of its revenues from outside the US (the UK alone accounts for 74% of sales). It also generates lots of business from the civil sector, where its operations include assistance with building and decommissioning nuclear plants.

Defence contractors like this are traditional safe havens in uncertain time like this. This is because global defence spending by large tends to remain unaffected by economic conditions, again a reflection of the critical products they supply.

These flight-to-safety qualities have helped Babcock shares gain 2.9% in value over the past month.

City analysts think the business will follow a 48% increase in annual earnings in the last financial year (to March 2025) with an 11% rise in fiscal 2026. This leaves it trading on a forward P/E ratio of 14.5 times, making it one of the best-value defence stocks out there.