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I’ve been scouring the FTSE 100 and FTSE 250 indexes for the best stocks to buy for my portfolio this month. Here are two I think demand serious consideration.
Growth spark
Europe has a significant ammunition shortage following decades of underinvestment. This leaves substantial earnings potential for Chemring (LSE:CHG), which builds components (like rocket motors, detonators, and explosives) for weapons systems.
The FTSE 250 firm has a leading position in this market, and is thriving as a result. Order intake at its Energetics division soared 154% in the six months to April as continental rearmament continued. Major recent contracts include a 12-year framework with Diehl Defence for its Chemring Nobel subsidiary to supply MCX energetic material to the German army.
Wisely, Chemring plans to increase capacity to capture this growing demand. It plans to spend £200m — up from a previous target of £120m — on factories in Scotland and Norway over the next few years.
The company also sees huge growth potential in its other areas like countermeasures and sensors. It does face notable competitive threats, however, such as from Eurenco, another specialist in advanced high explosives.
City analysts expect annual earnings to rise 26% this financial year (to October 2025). Increases of 16% and 22% are forecast for fiscal 2026 and 2027 as well.
Chemring’s shares now trade on an elevated price-to-earnings (P/E) ratio of 27.5 times. It might be pricey, but I still think this top stock deserves a close look in the current geopolitical climate.
Value hero
Financial services provider Aviva (LSE:AV.) has also enjoyed substantial share price gains so far this year. But its shares remain dirt cheap (I recently increased my own holdings in the FTSE 100 company).
City analysts think earnings will rise 114% year on year in 2025. This leaves it trading on a forward price-to-earnings-to-growth (PEG) ratio of 0.1.
A reading below one implies a share is undervalued. And Aviva shares remain below this value benchmark for the next two years — earnings are tipped to rise another 16% and 12% in 2026 and 2027, respectively.
Finally, the dividend yield here sits at 5.9%-6.9% over the three-year period.
Given its highly cyclical operations, earnings here are at risk as tariffs tensions impact economic growth. Yet analysts are still confident that Aviva’s earnings will spark into life as interest rates steadily fall.
That’s not all. With exceptional brand recognition — it’s been around since 1696, in one form or another — and leading positions in the wealth management, insurance, and retirement markets, it’s well placed to capitalise on long-term market growth. This is being fuelled by ageing populations and a growing demand for financial planning.
Encouragingly, Aviva’s shown strong appetite for expansion to maximise this opportunity. Recent takeovers include Probitas and Direct Line. With a Solvency II capital above 200%, too, it has the firepower to keep investing in capital-light businesses to grow earnings.
