The best thing to do is to be prepared. And the latest Guide to the Markets from JP Morgan has some useful advice for doing this.

Staying the course

The way to lose money in a stock market crash is to sell when prices are low. It sounds obvious, but it’s more common than you might think.

Source: JP Morgan Guide to the Markets UK Q2 2026

Downturns in the stock market typically coincide with heavy selling from funds. So just avoiding this is actually a big advantage.

Selling during a downturn doesn’t just realise losses. It also leads to missing out on subsequent returns. 

Source: JP Morgan Guide to the Markets UK Q2 2026

While one-year returns vary, the long-term picture is clear. Lower valuations – such as during a crash – lead to higher returns.

Investors shouldn’t take the prospect of a crash lightly. But despite the volatility, stocks do tend to outperform over time.

Source: JP Morgan Guide to the Markets UK Q2 2026

Selling in a crash feels like the natural thing to do. From a long-term perspective, though, holding cash hasn’t been a winning strategy.

Antifragility

I think the case against selling in crash is clear. But investors need to make sure they’re ready to deal with one when it comes.

This involves thinking about portfolio construction. And one idea is to include shares in companies that are antifragile.

That means they get stronger when things get tough. In the context of geopolitical shocks, defence stocks can fit the bill. The obvious name frome the FTSE 100 is BAE Systems. Demand for the firm’s products tend to be higher in times of conflict.

The downside is that growth prospects can be limited in normal times. Between 2016 and 2022, the firm’s revenues grew 3% a year. 

There is, however, another name that I think is worth considering. It’s much smaller, but that doesn’t make it any less interesting.

Small-cap defence

Cohort (LSE:CHRT) is a supplier of defence systems. It doesn’t make planes or submarines, but it makes the tech that goes into them.

The company is much smaller than BAE Systems. And that means there’s a risk of losing key personnel to more lucrative posts elsewhere.

Despite this, the stock is up 39% since the start of the year. But its growth prospects don’t just depend on conflicts lasting longer than people might hope.

Cohort looks to use acquisitions to boost its growth. This can be risky, but it has a good reputation for doing this well. New subsidiaries benefit from the firm’s financial backing. But a decentralised approach allows them to operate autonomously.

That’s a business model I like a lot. And that’s why I’m keeping it on my radar for when the geopolitical situation becomes a bit more stable.

Investing success

The best investors don’t succeed by getting out of the way of stock market crashes. They do well by going through them. 

Most of all that means avoiding selling when prices are low. It’s not just the cost of realising losses that makes this important. The missed future returns are also huge. And this means investors can get a huge advantage just by staying the course.

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The average price target is 43% above the current share price, compared with 3% for BAE Systems and even less for Rolls-Royce. So after a 36% rally this year, is there still time to consider buying?

Defence

There are lots of reasons for investors to look for potential opportunities in the defence industry right now. The most obvious is an increase in NATO spending that looks permanent.

As a result, firms with substantial exposure to defence spending have seen their share prices climb significantly. From the UK, BAE Systems is up 64% in the last 12 months and Rolls-Royce is up 120%.

By contrast, Cohort – a much smaller operation – is only up around 15%. As a result, £1,000 still buys 83 shares in the company and I think it’s well worth considering seriously.

The firm has had some issues lately, but these look like temporary challenges. And with the stock starting the year very positively, investors might well think this is the time to take a look.

Earnings

A look at Cohort’s latest earnings reveals something striking. While revenues grew 9% in the six months leading up to 31 October 2025, operating income actually fell from £10.1m to £9.7m.

This was because the firm’s new sonar systems for Italian submarines went into the volume production phase. Manufacturing these is more expensive than designing them, which meant lower margins.

Cohort, though, expects margins to recover in the next six months. For one thing, the project moving through its initial manufacturing phase should mean the firm can release cash held as a contingency.

Higher expected revenues should also boost margins. With sales going up faster than costs, the effect should be better profitability for the business as a whole. 

Risks

Cohort isn’t like the big defence contractors. Instead of making things like submarines and tanks, it makes the things that go into them – sonar systems, drone detectors, and so on.

In terms of revenues, it’s also around 1% of the size of BAE Systems. While that can mean more scope for growth, it also brings a risk of losing key employees to a bigger competitor with deeper pockets. 

That’s especially important in the defence sector. Replacing talented individuals is hard in any industry, but the added requirements for security clearance make key staff even harder to replace.

Investors should think carefully about this. But Cohort’s entrepreneurial culture and decentralised business might mean it can offer its key executives something they can’t find at a bigger firm.

An opportunity?

Rising defence spending could be a huge opportunity for investors, but Cohort’s revenue growth hasn’t been matched by its profits. That, however, could be set to change in the near future.

Management expects margins to recover in the next few months and continue on from that point. In fact, it’s targeting a mid-teen operating margin over the medium term. 

That’s roughly double the current level, implying a 100% increase in operating profits, even leaving revenue growth aside. I think that’s something investors should take very seriously.

The post £1,000 buys 83 shares in this UK defence company that’s tipped to outperform BAE Systems and Rolls-Royce appeared first on The Motley Fool UK.

US President Donald Trump has proposed increasing the country’s military budget from $900bn to $1.5trn by 2027. And the likes of BAE Systems (LSE:BA) stand to benefit. But there’s a catch.

Military spending

There’s no doubt a 50% increase in military spending is a very positive sign for the major defence companies that supply the US. And BAE Systems is one of these. 

The firm supplies munitions and combat vehicles to the US military. And it’s probably the UK company with the most to gain, so investors might well want to check it out. 

The company is listed in the UK with its headquarters in London. But BAE’s largest market is the US as that’s where 45% of its revenues come from. 

With significant operations across the Atlantic, including a number of factories, BAE is close to the action. The only thing is, it might be a bit too close for some investors. 

Capital constraints?

One thing investors need to take note of is that at the same time as the spending announcement, Trump told US defence firms to halt dividends and share buybacks.

Instead, they’re being instructed to reinvest this into improving manufacturing efficiency and reliability. And this is something that might be relevant to BAE and its investors.

The company’s US operations might put it on the President’s radar. But at least it’s been investing heavily in its manufacturing facilities recently, which could turn out to be a smart move.

I think BAE Systems is the most obvious UK stock for investors wanting to get exposure to higher US defence spending to consider. But there’s also another name I have my eye on.

Cohort

Cohort (LSE:CHRT) is a much smaller UK defence firm. Where BAE Systems makes vehicles, it supplies things such as sensors and sonar systems for these – and other – major projects. 

The firm’s cutting-edge products align well with Trump’s ambition to build a state-of-the-art military. But the company isn’t the largest or the most direct beneficiary and this creates risk. 

Cohort’s size can make retaining top engineers and preventing them from joining bigger rivals a challenge. And it’s likely to be a bigger problem if they all have more money due to a higher defence budget.

The firm, however, has a strong order book and margins are expected to improve in the next six months. And that’s before any kind of boost from higher US spending.

Investing in defence 

Ethical considerations understandably mean not every investor is interested in defence companies. But for those who are, a $1.5trn US defence budget is something to pay attention to. 

UK defence companies, such as BAE Systems and Cohort, should stand to benefit. Each, however, comes with its own risks. .

My own view is that either might be worth considering as crucially, it looks as though defence is set to be a major investing theme again in 2026.

The post 2 UK stocks that could benefit from a $1.5trn US defence budget appeared first on The Motley Fool UK.

I think, though, that there isn’t a lot wrong with the underlying business. And I can see clear reasons for positivity in both 2026 and beyond as the new year comes into view.

Defence spending

One of the big investment themes of 2025 has been defence. With NATO members set to increase their spending, several military equipment and technology stocks have done well.

Given this, Cohort’s decline makes the stock something of an outlier. But the obvious question investors will be asking is when will it perform if not in a banner year for the industry?

It’s a fair question. And it’s made all the more pressing by the fact that the company has made a number of acquisitions recently that should keep things moving forward.

While the firm’s recent results look relatively weak, I think there’s reason to believe some of the current challenges will be short-lived. So I expect 2026 to be a stronger year for the stock.

Product cycles

In its interim results, Cohort reported a 4% decline in operating income despite a 9% increase in revenues. And it’s fair to say profits going backwards wasn’t on the agenda.

The decline in margins, however, was due to the mix of products in different cycles. The firm’s projects make the most money when they’re in early stages involving design and research.

When they move towards development, they become less profitable as the need for materials and machinery increases. And this is what has been weighing on Cohort’s margins.

The firm, however, anticipates a return to earlier-stage work in the next six months. So there’s reason to think margins – and profits – are likely to recover in the near future.

Under-the-radar

Cohort is something of an under-the-radar company, which is ironic since detection is one of its core competencies. It’s a collection of smaller subsidiaries focused on defence technology.

Instead of aircraft or ammunition, it focuses on communications systems and sensors. And its products often appear in larger defence programmes, rather than as standalone projects.

Acquisitions have been a key source of growth for the company. But this brings an inherent risk of overpaying for a business that’s exacerbated by the firm’s decentralised structure.

A falling share price, however, goes some way towards offsetting this risk. And that’s why I think the stock is worth considering at today’s prices from a long-term perspective.

A defence opportunity

In some ways, Cohort being a supplier of technological systems makes it more attractive than bigger defence firms. It generally means lower capital requirements and higher margins.

This hasn’t been the case recently, which is why the stock is down. But the firm is attributing this to an unfavourable coincidence of projects in later stages of development and delivery.

The company expects this to improve in the near future and if it does, the stock could do very well in 2026. I’ve been watching it for some time and I’m interested in it for my own portfolio.

The post Down 20% in 2025, shares in this under-the-radar UK defence tech firm could be set for a strong 2026 appeared first on The Motley Fool UK.

While shares in other defence firms have surged, Cohort‘s (LSE:CHRT) trading below where it was in January. And I think the stock’s well worth considering before the end of the year.

The case for the defence

Cohort is actually a collection of smaller businesses. But instead of machinery or weapons, its subsidiaries specialise in things like surveillance, threat detection, and cybersecurity.

On the face of it, that should fit extremely well with the UK’s government’s focus. The 2025 Strategic Defence Review recommended these as key themes for future investment.

Cohort might expect to benefit, but the latest results were underwhelming. Earnings before interest and taxes (EBIT) are set to be below the previous year’s (admittedly strong) results.

Despite this, the firm’s standing by its full-year guidance for £291m in revenues and £35m in EBIT. And those numbers make the stock look attractive to me with a market value of £523m.

Business model

Cohort has a business model I like a lot. It involves acquiring smaller companies and helping them to grow by providing financial support or enabling them to enter new markets.

The firm operates on a highly decentralised basis. This can be a risky strategy, since it can lead to a lack of oversight and means the firm relies on managers for every individual subsidiary.

There are however, reasons why Cohort takes this approach. Making decisions without going through a central office makes subsidiaries more efficient and responsive to customers.

This is what I think matters most in the long term. And a business like this in an industry that’s showing promising signs of long-term growth could be a very attractive proposition.

A recipe for outperformance?

The strategy of buying businesses and helping them grow is one that has proved successful for a number of other companies. In the UK, Halma and Diploma are both good examples.

It’s no coincidence that these have been two of the FTSE 100’s top-performing stocks over the last 10 years. And that’s without the boost I expect higher defence spending to give Cohort.

This approach isn’t an automatic guarantee of success. It can go wrong if management misjudges a potential acquisition target and there are also examples where this has happened.  So far though, Cohort has a good record. And its size means it can look to take advantage of opportunities that are just too small to attract the attention of larger private equity investors. 

On the radar

Cohort’s share price has been falling since the middle of the year. And I agree that the stock looked expensive when it was trading at almost £18. At £12 though, the equation looks very different to me. If the stock hangs around at these levels in December, I’ll be thinking seriously about adding it to my Stocks and Shares ISA. 

The UK has some outstanding companies that buy businesses and help them grow. Cohort’s one of these and I think it has a good claim to being the most attractive right now.

The post Meet the UK defence stock I’m looking at for my Stocks and Shares ISA in December appeared first on The Motley Fool UK.

Some of the UK’s outstanding companies use size and scale advantages to generate a competitive advantage and strengthen this via acquisitions. And there are several that are worth considering.

The business model

A lot of the time, bigger is better. Operating at scale often brings increased buying power, the ability to spread costs over a wider revenue base, and a more convenient service for customers. 

One way of building scale is by buying other businesses. Rather than trying to establish a presence in a different country, it can be a lot easier to just acquire an existing operation.

There are a lot of benefits to doing this. It can expand the reach of a smaller business (boosting sales) and bring the opportunity to reduce costs (widening margins). 

There’s always a risk of paying too much for a new subsidiary. But for companies that are able to do it well, the strategy of expanding via acquisitions can be extremely effective. 

Stocks I own

I own shares in two companies that operate with this strategy. One is consumables distributor Bunzl and the other is Judges Scientific – a collection of scientific instrument businesses.

In both cases, acquisitions regularly bring new sales opportunities. New subsidiaries can often use the firm’s network to gain access to new markets, boosting sales and profits.

With Judges Scientific, demand can fluctuate with the economic cycle and this creates a risk. But I think the long-term picture is relatively strong, even though sales have faltered recently.

Bunzl’s market is more stable, but there’s a higher risk of customers switching to other providers. That’s why the firm’s ability to use its scale advantage to provide a better service is so important. 

Stocks I’d like to buy

I’ve got my eye on a couple more businesses with a similar structure. One is Compass – a contract catering firm – and the other is military technology conglomerate Cohort (LSE:CHRT). 

Cohort is set to benefit from an anticipated increase in defence spending. And this doesn’t seem to be a short-term response to heightened political tensions – it looks like it’s here to stay. 

Contracts in this industry often come with fixed prices and this means inflation pushing up input costs can make it hard to maintain margins. That’s a risk with this type of business. 

Barriers to entry, however, are high and Cohort’s subsidiaries have a lot of specialist expertise. And I think the firm’s size means it has a lot of scope to keep growing for a long time.

Long-term growth

Companies with strong competitive positions in a durable markets can be great growth stocks. And using acquisitions to achieve economies of scale can be a very effective way of doing this.

The reason I own Bunzl and Judges Scientific, rather than Compass and Cohort at the moment is simple. I think the former two have traded at more attractive valuations recently. 

Defence stocks – including Cohort – have been soaring recently and Compass has bounced back strongly after the Covid-19 pandemic. So I’m looking to be patient and wait for my opportunity.

The post 2 growth stocks I own and 2 more I’d like to buy appeared first on The Motley Fool UK.

Compared to the previous year, these showed a 33% increase in revenue to £270m and a 30% rise in adjusted operating profit to £27.5m. The group’s order book is now worth £616m.

On the day (16 July) this information was released to investors, its shares soared 13.5%.

But that was also the day on which the group’s chairman, chief executive and finance director — along with some of their close associates — sold a combined £9.76m of shares. The company’s stock’s now changing hands for less than before its impressive results were released.

What’s going on?

A partial exit

To be fair, you can’t spend shares. And if you’ve invested time and money helping to build a successful business, I don’t think it’s unreasonable to ‘cash out’ at some stage. All three have been involved with the company since it floated in 2006. But they haven’t exited entirely. They still retain a combined 3.7% shareholding.

However, the timing’s unfortunate. Admittedly, there are restrictions as to when a company’s directors can buy and sell shares. But some might interpret the move — the day on which the group announced its best-ever year — as a suggestion that its financial performance has peaked.

But I think this is wrong.

In vogue

That’s because, as depressing as the reasons are, the defence sector’s booming at the moment. NATO members have pledged to spend 5% of their national incomes on their armies, navies and air forces by 2035. More immediately, the British government’s announced it plans to increase its spending to 2.5% of Gross Domestic Product from April 2027.

It’s often said that the first duty of a government is to protect its citizens. Additional military spending is one element of this.

And Cohort’s one company that’s likely to benefit. During FY25, it reported adjusted earnings per share (EPS) of 54.44p. Analysts are expecting relatively modest growth in FY26 of 4.3% to 56.76p. Thereafter, the pace of increase is forecast to pick up – 64.85p (FY27) and 69.80p (FY28). If these estimates prove correct, EPS will grow by an average of 8.6% a year over the next three years.

Not cheap

But with a share price of around 1,445p, the stock’s trading on an expensive 25.5 times forward (FY26) earnings.

This could explain why the average 12-month price target’s 1,570p – ‘only’ 8.7% above its current level. However, as a relatively small company – its market-cap’s around £750m – only three brokers are covering the stock. Their targets are 1,200p, 1,570p and 1,750p respectively. This wide divergence of views isn’t particularly helpful.

My thoughts

But it seems to me that the group’s going in the right direction. It’s certainly operating in a sector that’s growing. It has some visibility on its order book until the mid-2030s and it’s always on the lookout for acquisition opportunities. And despite buying other companies in recent years, it retains a net cash position.  

Although it’s never a good look when insiders decide to sell, there doesn’t appear to be anything fundamentally wrong with the group. On this basis, those comfortable with the defence sector could consider adding the stock to their portfolios.

The post Directors are selling this UK growth stock. So why should anyone buy? appeared first on The Motley Fool UK.

The first is a firm that looks set to benefit from huge growth in its addressable market. And the second is a stock that might be too cheap after a negative reaction to its H1 results. 

Cohort

A 101% gain makes Cohort (LSE:CHRT) one of the best-performing UK shares of the last year. But despite trading at a price-to-earnings (P/E) multiple of 32, I think it’s still worth looking at.

The stock has been pushed higher by news that European defence spending is set to grow significantly over the next few years. As such, the market for its products just got a lot bigger.

Over the last few years, Cohort has assembled an impressive line-up of businesses focused on defence technology. As a result, it’s in a strong position when it comes to growth. 

It’s worth noting though, that a growing market might make acquisitions – which the company has relied on in the past – more challenging. And this is a risk that’s worth keeping in mind.

The company, however, is already starting to see signs of growth in its order book. And the shift to higher defence spending could well be durable, rather than temporary. 

It’s hard to overstate how significant the shift in European defence spending could be for firms like Cohort. That’s why I think it’s worth considering even after climbing over 100% in a year.

Porvair

Porvair (LSE:PRV) makes filtration equipment for aircraft and life sciences applications. And with the stock falling almost 10% after its latest update, I think it’s in interesting territory.

Sales and profits came in higher than the previous year, but the rate of growth was slower than during the previous period. This was mostly due to some weak demand in the aerospace market.

In general, the supply chain for aerospace is extremely complicated. And this can be a risk for companies – like Porvair – that sell components to aircraft manufacturers.

From a long-term perspective though, I think the stock looks attractive. Regulation creates high barriers to entry and generates a significant amount of recurring revenue for the business.

Furthermore, the falling share price makes the stock unusually cheap. Based on the company’s adjusted metrics, it trades at a P/E ratio of below 15.

Analyst price targets are around 17% higher than the current level of the stock. And I agree that it looks cheap, so I think investors seeking stocks to buy in July should take a look.

Buying British

Sometimes, the best way of finding stocks to buy is to avoid overthinking and overcomplicating things. A stock market crash when everything suddenly becomes cheap is a good example.

Other times, however, looking beyond the most popular names can be very rewarding. And this is what I think of the situation with UK shares at the moment. 

Both Cohort and Porvair are too small to generate much attention from analysts. But I think investors should have these stocks on their radars and consider buying them in July.

The post 2 under-the-radar UK shares to consider buying in July appeared first on The Motley Fool UK.

Names like BAE Systems and Rolls-Royce are obvious beneficiaries. But neither of these is the company that I think stands to be the big winner from increased military spending.

National security

The US has been putting pressure on NATO countries to start meeting their spending commitments. This involves investing at least 2% of GDP on defence each year. 

On top of this, US foreign policy is somewhat volatile at the moment. So other countries aiming for a more self-sufficient military operation is potentially desirable regardless. 

Britain currently does meet its spending commitment, spending 2.3% per year. But, its plan is to increase this to 2.5% and then 3%, which would be the largest increase since the Cold War. 

That doesn’t sound like much, but it would amount to a 30% increase in the defence budget. So I think it’s only natural for investors to be interested in the implications of this.

UK defence

BAE Systems sells a broad range of products and services to the UK government. This includes warships, aircraft, and munitions, as well as cybersecurity systems.

The thing is, though, the UK only makes up just over a quarter of revenues at BAE Systems. So other things being equal, a 30% increase in defence spending only translates into 7% sales growth for the firm.

With Rolls-Royce, its entire defence division only accounts for 24% of total sales. And while I’m a big fan of diversification, I think this means the impact of the UK increasing its military spending is likely to be even more limited.

Furthermore, only 14% of total revenues (across all three of its major divisions) come from the UK. So again, I think the biggest impact on growth is going to come from elsewhere.

Cohort

The stock that stands out to me in this context is Cohort (LSE:CHRT). With a market cap of £589m, it’s much smaller than BAE Systems, but around 54% of its sales come from the UK.

Cohort is actually a collection of smaller businesses focused on military technology. And even without governments committing more GDP to defence, it has some strong growth prospects.

This comes from its ability to acquire other companies and add them to its existing operations. This can be a risky strategy and the possibility of making a bad investment can’t be ignored.

Despite this, the firm’s relatively small size means it has a lot of scope to keep expanding. And demand for its products has climbed sharply over the last few years. 

Defence spending

The shares trade at a price-to-earnings (P/E) ratio of 26. That’s clearly high compared to other UK stocks and reflects a degree of optimism about the company’s growth prospects.

With almost 55% of sales coming from the UK though, a 30% increase in government spending could be significant. If the firm maintains its market share, revenues could rise around 16%. This makes the stock worth considering, I feel.

The post Defence spending is on the rise and this UK growth stock could be set to cash in appeared first on The Motley Fool UK.

Cohort

One example is Cohort (LSE:CHRT). The company is a collection of six smaller businesses focused on defence technology, specifically communications and sensors. 

With this type of business, demand is highly sensitive to political (in)stability. Obviously, this isn’t under the company’s control and this creates a risk that can’t be ignored.

The firm’s growth strategy however, has been very successful. It looks to acquire businesses that can complement its existing operations and leave current management teams in place.

This is the kind of model that the likes of Diploma and Halma have applied very effectively. And I think investors should keep an eye on Cohort as a business with a lot of potential.

Porvair

I also think filtration equipment manufacturer Porvair (LSE:PRV) is worth paying attention to. Its products help keep aircraft fuel clean and lab samples free from contaminants. 

These industries can be cyclical and this is a risk. With aerospace, for example, investors should pay close attention to the ongoing issues at Boeing and (to a lesser extent) Airbus.

Importantly though, these industries also have high barriers to entry. Both aircraft equipment and laboratory filters need to meet strict quality standards and specifications. 

This means customers have limited (or no) choice when it comes to suppliers and this translates into a lot of pricing power for Porvair. In this regard, it reminds me of Rolls-Royce.

Forterra

Forterra (LSE:FORT) is a straightforward business – it makes bricks. And a combination of efficient manufacturing and UK-based production helps it maintain lower costs than its rivals.

The business is naturally vulnerable to downturns in UK construction output. Furthermore, the debt on its balance sheet has been increasing over the last few years, which creates risk.

On the plus side, the government is aiming to boost housebuilding. And this should mean that demand for bricks is set to pick up before too long.

Lower costs than competitors is a big advantage for any business. It’s the advantage Howden Joinery Group has and I think there’s something similar here.

Off-the-grid

With high-quality shares, it’s often hard to find opportunities in stocks that other investors are looking at. These usually present themselves when the market overreacts to some news.

A bit further off the beaten track, however, there are companies that don’t necessarily get the attention they deserve. And that can mean buying opportunities come around more often. I think Cohort, Porvair, and Forterra are stocks investors should think seriously about buying.

At the very least, they should take a closer look and keep an eye on them going forward.

The post 3 little-known UK shares for investors to consider buying appeared first on The Motley Fool UK.