Tip of the month

My tip this month is Babcock, the defence and engineering group, for a string of good reasons that should see its share price hit 800p this year. The company has made an astute deal by buying VT Group for £1.4bn. The two businesses will form one of the biggest military training providers and will work with UK armed forces.

Babcock has a good track record in vehicle and aircraft servicing as well as supply. It has confirmed that recent trading has fulfilled expectations, and there will be more outsourcing opportunities once the government completes its strategic defence review in the autumn.

The company's order book is still worth a massive £8.3bn, which shows future growth is assured despite the possible return of recession. Babcock will be a prime beneficiary of government cost-cutting and VT Group will help on this front.

Buy Babcock at best price with a trailing stop/loss of 20 per cent to protect you against any major market fallbacks.

Stockmarket and alternative investments can fall as well as rise in value. Readers should consult their own professional advisers.