The FTSE 250‘s been shaken wildly in recent weeks as worries over growth shares have intensified. At one point in April, the index slumped to its lowest since autumn 2023 as tit-for-tat tariffs threatened to get out of control.
The danger of a widescale trade war hasn’t disappeared. Yet I believe now’s a good time for investors to consider going shopping for cheap UK shares.
Here are three from the FTSE 250 I think could rebound strongly from current levels and are worth a closer look.
WH Smith
A sharp price decline in April leaves retailer WH Smith (LSE:SMWH) trading on a low forward price-to-earnings (P/E) ratio of 8.8 times.
This reversal reflects fears that consumer spending could be impacted by trade tariffs. Newsagent Smiths operates shops on the UK high street and in international travel hubs (like airports and rail stations).
Yet the business still has tremendous growth potential that I don’t think is shown in its valuation. It’s soon to hive off its troubled high street operation, leaving it a pureplay travel operator with plans for rapid expansion.
Encouragingly, the company is focusing almost three-quarters of its new store pipeline on the highly lucrative North American market too. Trading profits at Travel rose 12% between September and February, and could continue soaring as global traveller numbers increase over time.
Allianz Technology Trust
Shares in Allianz Technology Trust (LSE:ATT) now trade at a near-8% discount to the investment trust’s net asset value (NAV) per share.
Its share price decline in April shouldn’t perhaps come as a surprise. ‘Magnificent Seven’ stocks like Apple, Nvidia and Microsoft are some of the trust’s largest holdings. And they stand to be especially affected by escalating trade tensions between the US and China.
But I believe recent weakness presents an attractive dip-buying opportunity. As the digital revolution rolls on, the Allianz Technology Trust provides a sea of opportunities for investors. Sub-sectors like quantum computing, artificial intelligence (AI), e-commerce and robotics all have significant growth potential in the coming decades.
With holdings in 50 different stocks, the trust gives share pickers the opportunity to capitalise on this while avoiding overexposure to just one or two stocks.
QinetiQ
With a forward P/E ratio of 11.8 times, QinetiQ‘s (LSE:QQ.) one of the cheapest European defence stocks out there. To put this in perspective, FTSE 100 defence businesses BAE Systems and Rolls-Royce trade on multiples of 22.6 times and 29.4 times respectively.
Why is it so cheap, you ask? News of weaker-than-expected sales and a £140m restructuring charge due to “challenging US market conditions” have sent it crashing from March’s record peaks. Conditions could remain tough too if Washington scales back defence spending in the years ahead.
But QinetiQ still has enormous earnings possibilities, in my opinion, as other NATO members and allies of the defence bloc ramp up arms budgets. The FTSE 250 firm currently generates 80% of sales from non-US customers like the UK, Australia and Germany.
It’s not without risk. But at current prices I think QinetiQ’s shares demand a close look.
