EVERY cloud has its silver lining and falling stock markets have brought good opportunities to pick up traditionally expensive defensive shares on the cheap.

Nick Raynor at retail stockbroker The Share Centre, said: “A seesawing market hasn’t put off everyone: there are opportunities for investors to pick up bargain shares in companies that are currently undervalued.”

Here are his top ten bargain shares for volatile times:

1 National Grid The shares have held up well, slipping just 7% to 721p over the past year. Investors should also be encouraged by Grid’s strong history of increasing dividends and it has paid a total of 33p per share over the past year.

2 Pennon Group The water and sewerage services business might have benefited temporarily from takeover talk in the sector a while back, although the focus has recently shifted from utilities to banking. However, EDF’s purchase of British Energy is almost complete and this might rekindle some corporate activity. The shares are down 1.7% at 596½p on the year.

3 Northumbrian Water Group The prospect of consolidation might also stoke the share price of NWG. Its shares have fallen 6.7% since last October.

4 Cobham The company makes equipment for the aerospace, defence, industrial and communications markets. Increased spending, especially in the US, is therefore good news and it recently won a contract to provide radio and audio integrated management systems for the Airbus A350 airliner. Expansion plans, a good set of August results, and a 2.4% fall in the price over the past year adds to the attraction.

5 Reckitt Benckiser The world’s largest household cleaning products group – which owns brands such as Cillit Bang, Vanish, Harpic and Airwick – has managed to increase targets and continues to hit them. Sales of basic household products are holding up well and Reckitt’s record for developing products should keep sales moving upwards. The shares are down 2.5% at £27.27 on the year.

6 Lloyds TSB For the very brave looking to take advantage of current weakness in the banking sector, Lloyds TSB could be worth a punt. Its takeover of HBOS should create a powerful entity on the high street and offer long-term value. Shares have almost halved to 290Äp in the past 12 months.

7 Tesco The retail giant unveiled a 10.7% rise in half-year profits last week, adding to its reputation as a classic defensive stock. While questions remain over its American venture, Tesco’s expansion into other markets, such as Russia, appears to be going well. It also raised its interim dividend by 11.6% to 3.57p. The shares have posted an annual fall of 15.1% to 393.3p.

8 British American Tobacco The group is renowned for its defensive properties and it reassuringly doesn’t appear to have problems raising funds. This, combined with its commitment to increase dividends and for long-term organic growth, makes BAT a buy for the risk averse. Share are up 11.4% at £19.01.

9 BT The telecom giant’s shares have fallen in line with the market – down 47.1% to 162.6p in the past year – but the sector remains relatively stable. Income seekers will be encouraged by its near 10% yield but in the present climate it might be wise to drip-feed money into this stock.

10 Land Securities Investors should be encouraged by the decision to split its £15 billion property portfolio into three separately quoted businesses, as the company looks to return value to investors. This, however, is likely to be a long process.

It remains a net seller of properties but has indicated that it will soon start buying again. The shares are down 24.9% at £12.90 in the past year.

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