That’s the question many institutional analysts have been busy trying to answer. Yet the team at Peel Hunt has highlighted 21 different businesses that are now on its Buy list.

So what are these stocks? And should investors follow these recommendations?

21 top stock picks for 2026

In no particular order, Peel Hunt’s list of top stocks to buy in 2026 is:

1. Avon Technologies (LSE:AVON)
2. Kier Group
3. MITIE Group
4. Renishaw
5. Rightmove
6. Atalaya Mining Copper
7. Boku Inc
8. Everplay Group
9. Galliford Try
10. Renew Holdings
11. AO World
12. Dunelm Group
13. CVS Group
14. Energean
15. Genus
16. Premier Foods
17. Sirius Real Estate
18. Volex
19. WAG Payment Solutions
20. Mortgage Advice Bureau
21. Bytes Technology Group

Are these no-brainers?

Diversifying across 21 growth stocks definitely sounds like a solid foundation for a new portfolio. But with only £500, that may be far from practical, given that a lot of capital is being gobbled up by transaction fees.

Even if an investor had considerably more money to invest, blindly buying this basket of 21 companies is still likely a bad idea. Why? Because Peel Hunt’s track record, while solid, is far from perfect.

Like most institutional analysts, not all recommendations end up going as planned. And investors can be left disappointed with the results. That’s why to minimise the risk of making a bad investment decision it’s crucial to investigate and understand what the opportunities and risks are.

So let’s start by taking a closer look at Avon Technologies.

Avon: bull vs bear

Avon specialises in manufacturing mission-critical personal protective equipment for both the military and local law enforcement.

Given rising geopolitical tensions and high defence spending trends across NATO, it isn’t surprising to see Avon on Peel Hunt’s list. The group’s already seen a massive surge in its order book. And earlier this month, management announced a new $12.7m contract for respiratory filters.

This multi-year structural tailwind, combined with a near-completed transformation programme, is paving the way to vastly superior growth and profit margins – a trend that has already started to emerge in its latest results.

However while encouraging, it’s important to recognise the risks surrounding this enterprise. A large chunk of orders is coming predominantly from the US Department of War.

As one of the biggest military spenders in the world, that’s not a major surprise. However, it does expose Avon to the fluctuations in the US military budget, which is routinely debated and contested among American politicians.

Budget cuts or spending freezes could have nasty knock-on effects for Avon. And while European orders are steadily helping diversify the revenue stream, it remains a relatively small part of the firm’s cash flow in 2026.

The bottom line

While far from risk-free, Avon Technologies does appear to offer a compelling bull case today. And the same appears to be true for the other stocks on this list, which may indeed be terrific buys for investors who do the due diligence and understand where the risks lie.

The post What are the ‘best’ stocks to buy with £500 in 2026? appeared first on The Motley Fool UK.

The State Pension alone will soon be paying out roughly £12,550 a year as of April. This alone isn’t enough to meet the minimum estimated cost of living. But when combined with an extra £1,000 a month from an investment portfolio, life in retirement becomes a lot more flexible.

So for those whov’e just turned 50 with no savings, here’s how to aim for a £1,000 monthly passive income using a SIPP.

Crunching the numbers

Earning an extra grand a month is the equivalent of £12,000 a year. And by following the 4% withdrawal rule, a portfolio that can sustainably generate this income will need to be worth roughly £300,000.

Obviously, that’s a pretty hefty sum, particularly for someone aiming to retire at 68, meaning they may only have 18 years to reach this lofty goal. The good news is, for the average person, this is more than achievable with a bit of frugality.

According to the Office for National Statistics, the median income for someone in their 50s is around £42,000. After tax, that’s roughly £34,000 at today’s current rates. And while rent and general living expenses will eat into this, those who sacrifice and manage to put aside £500 each month are on track to hit their retirement goal.

At a £42,000 salary, an investor is paying the 20% Basic Rate of income tax. But that also means they’re eligible for 20% tax relief on all deposits made in a SIPP.

So that £500 saved each month becomes £625 of investable capital. And investing £625 at the 8% average annual return of the stock market for 18 years translates into a pension pot of just over £300,000.

There’s only one problem: due to inflation, a £300,000 pension pot likely won’t be enough in 2044. Luckily, there’s a solution.

Stock picking to the rescue

Rather than relying on index funds to target an 8% long-term average return, investors can seek to build significantly more wealth by investing exclusively in the best businesses. And Avon Technologies‘ (LSE:AVON) shareholders have experienced this first-hand.

Over the last 18 years, Avon’s generated a total return of 1,518%. On an annualised basis, that’s the equivalent of a 16.7% return. And anyone whose been drip feeding £625 a month along the way is now sitting on a jaw-dropping £843,950 pension pot – almost three times more than passive index investors!

This enormous success stems from supplying mission-critical protective equipment to military and law enforcement agencies. And with growing geopolitical tensions leading to substantially more defence spending, the company continues to enjoy robust demand for its products with a record order book.

Having said that, it’s important to remember that geopolitical tailwinds are ultimately cyclical. And once ongoing conflicts are eventually settled, Avon’s revenue and profits could similarly start to cool. Nevertheless, it’s a stock that could be worth a closer look for investors seeking to build a diversified SIPP portfolio.

The post How much should a 50-year-old put in a SIPP to earn a monthly passive income of £1,000? appeared first on The Motley Fool UK.

A good average is typically around 20, with anything below 15 suggesting potential undervaluation.

The problem is, it doesn’t always tell the full story. Popular growth stocks, particularly those in technology, can have P/E ratios in the hundreds — and still see their share prices climb!

So to get a more accurate idea of where things are headed, I always check earnings forecasts. With these, I can calculate the forward P/E ratio, comparing the price to expected earnings in the coming year.

I recently applied this approach to the respiratory equipment company Avon Technologies (LSE: AVON).

A closer look at Avon

Avon designs and manufactures advanced respiratory protection equipment used by military, law enforcement and fire personnel. Its products include the FM50 respirator, which recently secured a £10.2m order from the Ministry of Defence (MoD). This deal adds to an already strong order book, suggesting healthy cash flow over the next year.

The market has taken notice – the share price has surged 66.8% in the past 12 months. However, the valuation looks lofty at first glance, with a trailing P/E ratio of 127.2 and a price-to-book (P/B) ratio of 4.78.

On the surface, those numbers scream overvalued. But when we factor in forecast earnings growth, the picture changes. Analysts expect earnings per share (EPS) to rise from 67p to 86p by 2026 – a 30% increase. That gives Avon a much more palatable forward P/E ratio of around 30. Revenue is also projected to grow by 7% to £242.3m.

Importantly, full-year earnings have beaten expectations three years running. Plus, operating margins are set to climb from 9.7% to 12% in 2025 — another encouraging sign of efficiency gains.

That said, margins remain thin compared to some peers, meaning there’s less room for error. If sales momentum slows or production costs rise, profits could take a hit. Avon’s operating cash flow of £23.4m is also modest when set against total debt of £65.3m (although this is well-covered by equity).

Another factor to consider is Avon’s reliance on large government and military contracts. While lucrative, these can be delayed, scaled back, or cancelled due to budget changes or shifting geopolitical priorities. This concentration risk means results may be more volatile than those of more diversified manufacturers.

A promising investment

To me, Avon looks less overvalued than its trailing P/E suggests. The healthy forward outlook is backed by a robust order book and proven execution, as shown by repeated earnings beats.

There are still risks, notably its relatively thin margins and exposure to government budgets. But the growth forecasts and rising operating efficiency suggest a business moving in the right direction.

For investors seeking indirect exposure to the defence sector without buying a traditional arms manufacturer, Avon Technologies is a promising candidate to consider.

The post A P/E ratio of 127! Is this soaring FTSE 250 stock as overvalued as it looks? appeared first on The Motley Fool UK.

Compounding to £1m

When it comes to the stock market, investors need money to make money. But contrary to popular believe, even someone from a modest background can still grow a life-changing fortune over time. Not by pursuing lottery-like penny stocks, but by being consistent and doubling down on the highest quality businesses.

FTSE shares have historically generated an average annualised return of 8% every year, including dividends. Investing £500 each and every month at this rate of return will build £1m in around 34 years. And those who started during the pandemic are already 15% of the way through their wealth-building journey.

However, that’s just when investors rely on index funds. Those willing to take on more risk and explore the realms of stock picking could drastically shorten their journey towards a seven-figure fortune.

Stock-picking potential

Stock picking’s a tricky task. Identifying high-quality enterprises that can maintain and expand their market share over the long run is difficult enough. Throw in the added complexities of corporate valuation and the emotional rollercoaster of stock market volatility, and the task only becomes harder. And yet those who put in the work and due diligence can achieve some pretty phenomenal returns.

Over the last 15 years, FTSE shares like Avon Technologies (LSE:AVON) and Morgan Sindall Group have demonstrated the power of stock picking, delivering 1,730% and 750% gains respectively. That’s an average annualised return of up to 21% – enough to make a £1m portfolio with £500 a month in just 17 years.

Yet this journey of explosive gains hasn’t been a smooth ride. Zooming in on Avon, the military protective equipment manufacturer has seen its stock rise and fall aggressively since 2010. Failures in military testing combined with supply chain disruptions compromised key customer contracts, resulting in several profit warnings that triggered a massive sell-off in 2021.

However, since then, investor confidence has started to rebound as mistakes of the past were corrected, and demand for its protective equipment bounced back. Subsequently, margin expansion’s now progressing ahead of schedule while revenue growth’s accelerating – a trend that’s started pushing the FTSE share back in the right direction.

Taking a step back

What defines a company’s quality is less about how they perform during the good times but rather how they do in the bad. Avon suffered heavily from its mistakes. But by keeping the balance sheet in a robust shape and not growing complacent, management’s seemingly steering the ship back on course.

As with every investment, there are still risks to consider. For example, the company’s ramping up production for one of its US Department of Defence contracts. But should this process encounter any delays or quality control issues, the group’s recovery momentum could be adversely impacted.

Nevertheless, even with external threats and challenges to overcome, Avon appears to show a lot of promise for long-term investors. That’s why I think it’s worth a closer look.

The post FTSE shares: how £500 a month could put investors on the path to becoming millionaires appeared first on The Motley Fool UK.

As things stand, there are three stocks set to join the mid-cap index. These are Wickes (LSE:WIX), Gamma Communications (LSE:GAMA), and Avon Technologies (LSE:AVON).

Should I buy any of these soon-to-be FTSE 250 stocks?

Wickes

The first thing I look for in a stock is the growth rate. I want to invest in a firm that is growing strongly and set to continue doing so in future. Therefore, I’m ideally wanting some sort of secular growth that the company is capitalising upon.

Immediately, this makes me think Wickes might not be a good fit for my portfolio. The share price is up 46% year to date, but still about 11% lower than when it listed in 2021 after being spun off from Travis Perkins.

Wickes sells DIY products and demand will generally wax and wane depending on what’s going on with inflation and the economy.

In the first 17 weeks of 2025 though, group revenue increased by 6.9% year on year to £533m. It said it was capturing market share as more local trade professionals choose Wickes. 

During the early May bank holiday, the company enjoyed its best-ever week for sales of compost and top soil. But that was due to the nice weather, which unfortunately can’t be relied on in the UK. If inflation spikes and the economy contracts, growth could slow.

There’s a 5% dividend yield here and an undemanding forward price-to-earnings (P/E) ratio of 11.6, based on next year’s forecast. The firm could also end up benefitting from the Labour government’s house-building drive.

However, looking at the growth rate, this business doesn’t excite me. In 2023, revenue was £1.55bn. In 2026, it’s expected to be just under £1.7bn, meaning there’s not much top-line growth here.

Avon

Avon Technologies is more interesting to me. The firm makes things like gas masks, combat helmets, and various breathing apparatus. I expect demand for these to stay strong as Europe re-arms and global defence spending remains elevated. 

First-half revenue rose nearly 17% to $148.7m, with the order book closing up 24% ($247m). Solid stuff.

That said, a permanent ceasefire in Ukraine and US defence budget cuts are potential risks to medium-term growth here.

The stock is currently trading at 30 times forecast earnings for this fiscal year (ending September), which is a bit too pricey for me.

Gamma

The one that piques my interest the most here is Gamma Communications, which has a £1.1bn market cap. It provides cloud-based communication and connectivity solutions, aimed mainly at small and medium-sized enterprises. 

Naturally, a UK recession could impact customer acquisition growth. But Gamma has a growing presence in Spain, Germany, and the Netherlands, so is becoming increasingly diversified. 

In recent years, the firm has achieved a compound interest growth rate (CAGR) of 12% in revenue and 14% in earnings. Future growth looks strong too, as Gamma is quite disruptive by offering telephony, internet, mobile, and security services through a single platform.

Finally, the valuation is attractive, with the growth stock’s forward P/E ratio at just 12.5. I’ve put the stock on my watchlist while I dig in a bit more.

The post These 3 UK stocks are set for promotion to the FTSE 250. Should I buy any of them? appeared first on The Motley Fool UK.

Is it the best stock to buy in the index right now? I wouldn’t claim that, because that will be different for each investor, but I do like it a lot.

Active in the defence industry

The business is another play on the theme of defence. So, with governments tending to increase defence expenditure, there’s a lot of momentum in the sector.

There’s also plenty happening in the business and with the share price recently, as the chart shows:

The company designs, develops, tests, and manufactures integrated protective systems. The firm’s portfolio includes full-face respirators, ballistic helmets, escape hoods, self-contained breathing apparatus (SCBA) systems, modular powered air purifying respirator (PAPR) units, thermal imaging cameras and underwater equipment.

In late January, the order intake for the first quarter of the trading year was 36% higher than 12 months earlier. The directors said the boost arose because of strong demand for helmets and rebreathers. In one example, the company secured a contract with the German navy – such is the quality of the company’s customers.

At the beginning of 2024, the order book was 21% higher than the prior year figure, suggesting strong operational momentum in the business.

City analysts have pencilled in an advance in normalised earnings just above 31% for the trading year to September 2025. Set against that, the forward-looking earnings multiple is just below 24 with the share price at 1,202p (26 April).

Is that a fair valuation? After all, the FTSE All-Share index is trading on a median rolling price-to-earnings (P/E) ratio as low as about 12.

Recovery, growth, and risks

I’d say the rating here is okay as long as strong growth in earnings continues. One way of judging a fair valuation is by comparing the earnings multiple to the growth rate. If the P/E is at or below the growth rate for earnings, it could be argued the valuation is fair.

However, such methods can be risky. If Avon Protection fails to make its estimates, or if the ongoing growth rate declines, it’s possible for the valuation to rate lower. In other words, instead of the market assigning a multiple of 24, Avon’s P/E could drop to, say, 15.

A de-rating like that can sometimes lead to a falling share price and shareholders may lose money on the stock.

Nevertheless, I’m optimistic that growth may prove to be enduring. On top of that, the company is recovering well and restructuring after a disastrous episode that pulled the rug from under the business and the stock a few years back. The directors ended up shutting down the firm’s body armour business after its products failed US military tests – ouch!

So Avon Protection is a recovery play as well as a growth proposition. However, that painful body armour episode reminds us as investors that stocks and businesses come with risks as well as opportunities. Previous to the debacle, the stock had been high flying.

I’m in this one, though, despite the risks, and see it as a good contender in the FTSE All-Share index for further research and assessment now. It could make an interesting addition to a diversified portfolio.

The post Is Avon Protection the best stock to buy in the FTSE All-Share index right now? appeared first on The Motley Fool UK.

Defence products

As a quick introduction, Avon is a technology business that designs, manufactures, and produces life-critical personal protection systems and products for the defence sector. Some of its best-known products include body armour and masks that many armies, security services, and police forces use around the world.

So what’s the current situation with Avon shares? Well, as I write, they’re trading for 948p. At this time last year, the stock was trading for 1,937p, which is a 51% decline over a 12-month period. The shares took a hit at the end of last year when an acquisition went badly wrong as well as the fact that one of its key armour products failed a US army test.

A growth stock with risks

Firstly, I can see Avon has a fair amount of debt on its balance sheet. This can hinder the growth of a business and Avon has had to pull back on research and development (R&D) spending due to this. R&D is a pivotal ingredient for growing any business. This is especially the case in the defence sector.

Next, defence spending is key for many governments throughout the world. However, when the state of the global economy is uncertain and a potential recession is looming like now, demand may temporarily drop. Furthermore, pre-agreed contracts can be delayed and this is a common occurrence in the defence industry. All of these issues could affect Avon’s short-term balance sheet and levels of returns.

The investment case

I always view any growth stock as a long-term investment so I’m willing to accept some shorter-term headwinds. The longer term is where I believe Avon could thrive and provide me consistent returns through growth. Here’s why.

Firstly, Avon has an excellent relationship and ties with the US Department of Defense. This relationship provides lucrative opportunities as the US government is one of the biggest defence spenders in the world.

Next, the defence landscape is changing and this should benefit Avon, in my opinion. Research indicates that global defence spending rose to record annual levels in 2021. Avon also recently confirmed that since the tragic events in Ukraine began, it has experienced heightened demand for its products.

Finally, Avon shares currently pay a dividend that would boost my passive income stream with a current dividend yield of 3.5%. I am buoyed by this but viewing it as a growth stock, I would expect this rate of return to continue to grow. Dividends are never guaranteed and can be cancelled at any time, however.

I do believe Avon could be a great growth stock to buy for my holdings. Analysts believe the future could be lucrative although I am aware forecasts don’t always come to fruition. The recent share price drop has only made it a more attractive prospect for me.

The post Here’s 1 growth stock I like for long-term growth and returns! appeared first on The Motley Fool UK.

Even as recession approaches, countries will continue to invest in their armed forces. Spain’s £500m order for 20 new Eurofighter planes from BAE Systems in recent weeks illustrates the point. Nations will always spend heavily to protect their borders at all stages of the economic cycle.

Global defence expenditure rose to record annual levels in 2021, and Russia’s invasion of Ukraine since then has raised the appetite for governments to keep spending. This is why I’d consider snapping up Avon Protection (LSE: AVON) shares today.

Demand outlook has improved

This particular UK defence share manufactures body armour and masks that armies, security services and police forces use all over the globe.

Back in May it announced that “there has been a significant increase in expression of interest in our products” following the outbreak of the Ukraine war. It added that it expects to see “a significant shift in demand in the short, medium and longer term.”

I like Avon because of its strong relationship with the US Department of Defense that provides exceptional revenues opportunities. This has been helped in part by its acquisition of 3M’s advanced ballistic protection business in 2019.

Risks to Avon Protection

I’m concerned by the large amount of debt Avon Protection currently has on its books. Net debt jumped to $88.3m as of April from $44.1m a year earlier. The business has been forced to curtail research and development spending because of this.

Trading at Avon has also recently been impacted by bumpy US federal budget discussions this year, an issue that has hit orders. Contract delays are a common problem for defence businesses that can have big consequences for near-term investor returns.

A dirt-cheap UK share

That said, the latter point isn’t a dealbreaker for me. I buy UK shares based on the returns I can expect to make over the long term. We’re talking about a minimum of 10 years and above.

And over this sort of timescale I think Avon Protection could deliver exceptional shareholder profits as the geopolitical landscape evolves.

The threat of a new Cold War isn’t the only likely driver of defence spending this decade. According to the Stockholm International Peace Research Institute, China spent 4.7% more on weapons year-on-year in 2021. Russian spending also climbed 2.9% last year.

In the more immediate future City analysts think the business will see earnings tank 67% in this financial year (to September 2022). But they reckon profits will rebound 250%+ next year. This means Avon trades on a rock-bottom price-to-earnings growth (PEG) ratio of 0.1 for fiscal 2023.

At current levels around £10 I think this beaten-down business could be a steal. I expect the defence giant to recover strongly from recent heavy share price weakness.

The post A beaten-down UK share to buy as a global recession looms! appeared first on The Motley Fool UK.

BAE is shining

BAE Systems (LSE: BA.) has enjoyed significant share price appreciation due to the uncertain geopolitical backdrop, and this could continue. So far, £104bn of defence spending increases have been announced by seven European countries. BAE is already benefiting from this, with contract wins from the German government. Military equipment such as fighter jets and naval ships made up about half of the group’s sales as of December 2021.

The company is attractive to me both as an income and growth investor. It currently has a 3.4% dividend yield and the continued development of its cyber intelligence units should boost higher margins.

The shares are more expensive than their longer-term average, currently at 15x forward price-to-earnings (against an average of 11x). But I think they could get more expensive as rising tensions between China and Taiwan could be reflected in the price of defence stocks such as this. Regardless of that, general commitment from governments to increase defence spending should benefit BAE and so the company has scope to grow into its valuation. This is a stock I may add to my portfolio soon.

Avon is underperforming

Another large defence player in the UK is Avon Protection. Unfortunately, I can’t be so optimistic about this stock. The shares have fallen 61% over the last 12 months. This downtrend doesn’t appear to be ending any time soon either. The company confirmed plans to wind down its body armour business in December after Avon products failed US Army tests. Alongside this, it was announced that its CEO will leave at the end of this year.

Streamlining operations may lead to a turnaround for the stock longer term, but there’s too much uncertainty today for me to invest. Also, the stock is too speculative for my liking, given the high valuation at 40x earnings.

Software is the new defence

Two other companies I’ve been monitoring are Chemring and Palantir. Chemring supplies the defence industry through its Sensors and Information (S&I), and Countermeasure and Energetics products. The company saw a 27% increase in underlying profit for its S&I business over the past six months and should benefit from the government defence spending mentioned above. Chemring’s steady profits and reasonable valuation mean this could be a quality stock to hold in my portfolio for years.

Meanwhile, a high-growth play in this area is Palantir, an AI data analytics company that makes a digital clone of a business, aiming to improve its efficiency and digital security. It has won several US Government defence contracts and is currently bidding for a £360m contract to control the UK’s NHS IT infrastructure. It seems it has what Warren Buffett would describe as a ‘moat’ around its business because once a company adds Palantir’s clone to its digital infrastructure, it becomes hard to change provider. This could be a great long-term purchase for my portfolio.

The post The battle of the defence stocks appeared first on The Motley Fool UK.

Fundamentally, Avon Protection’s figures are promising. With a compounding annual growth rate of earnings per share of 50.48%, this stock has delivered outstanding results for the past five years. Furthermore, its price to earnings ratio of 11.8 suggests that its share price should be significantly higher than where it is currently. In terms of its products, Avon Protection is the only company in the UK and Europe, and one of two globally, that manufactures equipment for all specialised fields: emergency services, military, biochemical protection, and nuclear. While it produces body armour and hazardous material suits, it also manufactures respirators and helmets. The helmet production was enhanced with the acquisition of US company Team Wendy.

While it has a diverse business, the news is not all good for Avon Protection. Suspicions rose in June 2021 when Berenberg cut the Avon Protection price target from 3,335p to 2,955p. The following August, it was announced that the company’s 2022 revenue guidance was being cut from $357m to $320m-$340m. In the same announcement, however, Avon Protection stated its order book was up 21%, indicating the increasing need for its products. Nonetheless, with the pandemic easing, supply chain issues began to nibble away at the share price. Since then, a major flaw in body armour testing has dented investor confidence and the leadership eventually took the decision to wind down this part of the business over the course of the next two years.

These problems have created a rather interesting chart over the past four months. We can see the first price gap on 13^th August and a second, larger gap on 12^th November that took place on extremely heavy volume. These gaps both correspond with the negative supply chain and body armour news stories. While the stock is in an unmistakable downtrend, there is a remote possibility that the price is currently in the head position of an inverted head and shoulders formation. This could mean that a price reversal is in progress and the aforementioned gaps could be filled. There are clear problems with this stock, but these are mainly short-term issues that can be rectified in time. The management has addressed the body armour shortcomings by taking the courageous decision to wind down this part of the business. With solid fundamentals and potentially encouraging price action, I am glad I invested in this stock and will be adding in the near future. I am not surprised this stock is up 10% today.

The post The Avon Protection share price is up 10% today! Here are the reasons why I find this UK stock attractive appeared first on The Motley Fool UK.