Searching for the best growth shares to buy this month? Here are two from the FTSE 100 and FTSE 250 I feel demand close attention.
Babcock International
City analysts expect Babcock International (LSE:BAB) to report robust full-year earnings growth later this month (25 June). A 55% bottom-line rise is predicted for the 12 months to March, driven by conditions across both its defence and civil operations.
As an investor, I like this diversification as it reduces the impact of weakness in one or two areas at group level. The company’s operations include maintaining the UK’s nuclear submarine fleet, training fighter pilots, tank drivers and emergency services, building armoured vehicles, and servicing and decommissioning nuclear power stations.
However, I’m most excited by the enormous opportunities Babcock enjoys in the defence sector. It makes around three-quarters of revenues from defence customers, and rising arms expenditure drove its contracted backlog to an impressive £10.1bn as of March.
Reflecting its strong markets, brokers expect the FTSE firm’s earnings to rise another 8% this fiscal year, and by 10% in fiscal 2027.
These growth projections could suffer a setback if US defence spending trends lower. But encouragingly, Babcock has limited exposure to Department of Defense budgets, which helps to mitigate this risk.
Furthermore, moderating arms spending in the States would likely be offset by rising spending among other NATO nations and partners of the defence bloc. Babcock’s four largest customers are Britain, Australia, South Africa and Canada.
Britain’s participation in the Security Action for Europe (SAFE) initiative provides additional reason for optimism too. Domestic defence companies will now have access to the EU’s £150bn loan fund for defence projects.
Today, Babcock shares trade on a forward price-to-earnings (P/E) ratio of 16.5 times. This makes it one of the London stock market’s cheapest defence stocks on this metric.
NCC Group
The FTSE 250’s NCC Group (LSE:NCC) is also tipped for strong and sustained profits growth.
Forecasters anticipate a 55% earnings jump for the financial year ending September 2025. Further double-digit rises (of 30% and 23%) are predicted for fiscal 2026 and 2027 as well.
Like Babcock, current growth projections make the cybersecurity specialist looking ultra cheap on paper too. A forward price-to-earnings growth (PEG) ratio of 0.6 comes in below the widely accepted value watermark of one.
It’s possible that these growth projections could disappoint if the world economy stumbles and businesses scale back spending. However, I’m optimistic that the essential software and assurance services NCC provides could limit weakness compared with the broader tech sector.
Marks & Spencer‘s catastrophic online outage in April outlines the importance of having robust online protections. And the threat’s steadily growing (the head of HSBC‘s UK unit said the bank’s “being attacked all the time” by online criminals).
NCC’s a share I think is worth considering owning for the long haul. Fortune Business Insights expects the global cybersecurity markets to grow at an annualised rate of 14.3% between 2024 and 2032.
