One company that’s caught my attention lately is Warpaint London (LSE: W7L), a cosmetics retailer that’s fallen sharply this year but still looks impressively profitable.

Now trading just over £2, £500 would net me around 226 of the shares. But would that be a good idea?

Let’s have a look.

Betting on beauty

Warpaint sells branded cosmetics under the lead names W7 and Technic, alongside a mix of others like Man’stuff, Body Collection, and Chit Chat.

Most of its products are sold in the UK through major retailers, with growing international sales via distributors and retail chains. The Technic brand has a strong focus on the gifting market, a segment that performs particularly well during the festive season.

Earlier this year, the group made a bold move to expand its reach. In February, it acquired several well-known health, beauty and personal care brands — including Skin & Tan, Super Facialist, Dirty Works, and Fish Soho. They’re all part of its strategy to diversify and grow.

Crunching the numbers

In September, the stock took a nasty tumble after the company lowered its full-year guidance. That spooked investors, leading to a share price down by almost 58% so far this year. 

Yet, when looking at the numbers, the business still appears solid. In the latest results for the six months to 30 June, revenue rose 8% to £49.3m, helped by the February acquisition. UK sales jumped nearly 16% to £18m, showing strong domestic demand. However, profitability took a hit from non-cash foreign exchange losses and one-off acquisition-related costs.

As a result, EBITDA slipped 5% to £10.8m, while profit before tax plunged 41% to £6.4m.

Even so, a return on equity (ROE) of 25% is nothing short of impressive. That’s the kind of number usually reserved for top-tier growth stocks, not a small-cap beauty brand. The fall in profit seems largely due to short-term factors rather than a deeper structural problem, which could make the current valuation look overly pessimistic.

The risks

Of course, this is still a small-cap share, which means volatility is par for the course. A weaker pound or supply chain cost spikes could easily erode margins. Plus, integration risks from the Brand Architekts acquisition also remain. Combining multiple consumer brands can be tricky, especially when they compete for the same retail shelf space.

Another concern is that the company’s recent strong growth might have set unrealistic expectations. If sales momentum slows, the market might continue to punish the share price.

My verdict

A recovery’s never guaranteed, which is always a consideration when chasing value stocks. But what I like about Warpaint is that it remains highly profitable and offers a 5% dividend yield — a welcome boost for income investors.

Plus, the dividend’s been growing every year since Covid, showing management’s commitment to shareholder returns.

Even if the share price doesn’t bounce back immediately, that income stream makes it easier to wait. And if it does recover, well, that could turn a decent holding into a very rewarding one.

For me, this is a compelling FTSE share to consider for both value and income portfolios.

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The AIM-listed beauty specialist, owner of brands including W7, Technic and Super Facialist, sells affordable cosmetics through the likes of Boots in the UK, as well as in the Netherlands, the Philippines and the US. The shares were skyrocketing when I bought them, but the momentum drained away after full-year 2024 revenues, published in February, fell short of expectations. They still climbed 13.8% to £102m, but it wasn’t enough.

Yesterday, I was sitting on a loss of about 25%. After today’s shocker I’m down 44%. So what do I do now?

Warpaint plc is badly injured

Today’s numbers looked solid at first glance. Group revenue rose 8% to £49.3m, helped by February’s acquisition of Brand Architekts. UK sales jumped almost 16% to £18m, while overseas revenue edged up 3.2% to £31.3m. Gross margins improved 250 basis points to 45%. Management flagged up growth opportunities in Boots and Superdrug stores.

But profit before tax plunged 41% to £6.4m, largely due to foreign exchange losses and acquisition-related costs. Adjusted earnings per share fell 13% to 8.5p. The group did at least raise its interim dividend from 3.5p to 4p. The trailing yield is now 4.73%.

What really spooked investors was the guidance. The board now forecasts adjusted EBITDA between £23.5m and £25.5m, sharply down from previous guidance of approximately £29m. Management blamed weak consumer sentiment in the UK, uncertainty in the US, and the collapse of a long-standing partner, Bodycare, which owes £300,000. With the shares now down 50% over 12 months, I’m wondering whether to cut and run.

Never sell in a panic

Warpaint is still expanding, margins are improving, and Christmas trading should help. But sentiment has soured.

Under strict Motley Fool trading rules, I can’t buy or sell a stock within two full days of writing about it. That’s gives me time to cool off. Selling today would only turn today’s paper loss into a real one. There’s a chance it could be mitigated, if bargain hunters move in.

Buying is risky too. In my experience, problems like the ones we see today can drag on. There may be more bad news in the pipeline. Another reason to let the dust settle.

The big question is whether the long-term story still holds and you know what, I think it probably does. So I’m going to keep watching and see if management can give Warpaint a rosy glow.

AIM-listed recovery play

There may even be a case for investors who don’t yet hold the stock to consider buying at today’s much lower entry point, but they must be ready for more volatility. I’d advise extreme caution.

There’s a danger I’m holding for the wrong reasons. Basically, because I refuse to admit I got it wrong. But if the inflation eases and interest rates fall, a beaten down consumer stock like this one could rally hard. For now, Warpaint stays in my portfolio while I lick my wounds.

The post My favourite UK growth share crashed 20% this morning – should I sell or buy more? appeared first on The Motley Fool UK.

Here are three of them.

Ashtead Technology

The first is Ashtead Technology (LSE: AT.), which rents out subsea equipment to the global offshore energy sector. The stock has been a horror show this year, falling 40%.

One key problem is that global instability is negatively impacting large-scale energy projects and investment decisions. With tariff uncertainty persisting, these issues could drag on into next year.

For long-term investors though, I think there may be an opportunity here. The £266m market-cap firm is proactively reducing its exposure to low-margin equipment sales, which will cause a short-term revenue dip. But this strategic move should improve profitability in the long run.

Moreover, revenue is still expected to increase 23% to around £206m this year, which isn’t too shabby considering the challenging environment. Most of Ashtead Technology’s equipment can be used for either offshore oil and gas or renewable energy projects. This provides resilience, as does its global presence.

Following the fall, investors can pick up the shares for just 7.5 times forecast 2025 earnings. While trading is volatile now, I think there’s every chance this stock could bounce back when the smoke clears.

Windar

Sticking with the renewables theme, Windar Photonics (LSE:WPHO) looks interesting. The Danish company, which has a small £57m market cap, designs and sells sensors that help wind turbines detect wind direction and speed more accurately. This helps the blades adjust for maximum efficiency and power output.

This year, revenue is expected to jump around 109% to €9.5m, as the firm wins more contracts to retrofit its systems onto turbines. What I like here is that the company is also expected to turn profitable this year.

Based on forecasts for 2026, the forward-looking price-to-earnings multiple is 15.5. This translates into a price/earnings-to-growth (PEG) ratio of 0.2. For context, a PEG ratio between 0.5 and 1 is considered good value.

Of course, the lack of consistent profitability adds risk, as does Windar’s small size. And while the balance sheet looks fine now, the firm may need to tap shareholders for cash in future.

Warpaint

The final stock is Warpaint London (LSE:W7L). This an affordable cosmetics supplier behind brands like W7 and Technic.

The shares are down 40% year to date, giving the firm a £252m market cap.

Last year, group sales grew 13% to £102m, with earnings per share jumping 29% to 23.5p. However, management warned of a slowdown in its US business this year, largely due to higher tariffs. These are a risk in this industry because it could lead to higher prices, heaping even more pressure on inflation-weary consumers. 

However, Warpaint says that overall group sales are being achieved at a significantly higher margin than last year. And double-digit growth on both the top and bottom lines is still expected this year. Warpaint might even be able to take market share due to its value proposition.

After the share price slump, the stock looks attractively priced, with a forward P/E ratio of 10.7. There’s also a well-covered 3.5% dividend yield on offer.

Overall, I like the risk/reward set-up here.

The post 3 UK stocks to consider buying while they’re this cheap appeared first on The Motley Fool UK.

Here, I’m going to highlight a stock that is currently trading 46% below its average analyst price target. If its target price was to be achieved, a £2,000 investment today could potentially grow to £3,760.

A small-cap stock with potential

The stock in focus here is Warpaint London (LSE: W7L). It’s a small AIM-listed cosmetics company that makes products at affordable prices and is a member of the FTSE AIM 100 index.

Its main brands are W7 and Technic. These are sold by a range of retailers including Boots, Superdrug, Amazon, and Tesco.

City analysts are bullish

Currently, this stock trades for 359p. Yet the average price target is 667p.

That target is a whopping 88% higher than the current share price. In other words, analysts see the potential for significant gains in the medium term.

Too optimistic?

Now, analysts’ forecasts always need to be taken with a pinch of salt. Often, they don’t come to fruition.

So, there’s no guarantee that this stock will hit 667p. I personally think that price target could be a stretch in the near term as sentiment towards the stock is not great right now.

Long-term appeal

That said, I do think the stock looks interesting at the moment. And I can see potential for gains in the long run.

This is a company that’s growing at an impressive rate. This year, analysts expect top-line growth of about 19% (after 13% growth last year).

Meanwhile, after a big share price drop, the valuation is quite low. Currently, the forward-looking price-to-earnings (P/E) ratio is only 13.3, falling to 11.6 using next year’s earnings forecast.

That valuation strikes me as attractive relative to the growth being generated and the company’s level of profitability. Last year, return on capital employed (ROCE) – a key measure of profitability – was a high 31%.

It’s worth noting that last time I covered the stock (in 2024), the P/E ratio was in the mid-20s. So, the valuation has come down a lot and is now at a far more attractive level.

Two key risks

It’s worth pointing out that US tariffs are a risk here. The US isn’t a huge part of the overall business but tariffs still add some uncertainty in terms of future profitability.

Competition is another risk to consider. Cosmetics is a very competitive market and it’s not hard these days for new entrants to capture market share from existing players.

Overall though, I like the risk-reward proposition at the current share price. I think this stock is worth considering today.

The post This £3.59 FTSE stock could turn £2,000 into £3,760 over the next 12 months, according to City analysts appeared first on The Motley Fool UK.

Warpaint’s corporate mission is to “ensure everyone has access to high-quality cosmetics at an affordable price”. Owner of the W7 and Technic brands, its products can be found here in Boots and in the US, as well as hundreds of stores in the Netherlands and Philippines.

I added the stock to my self-invested personal pension (SIPP) in January last year. At the time, it was flying, having increased by 360% in five years. Over the last 12 months, it’s down 6%.

Warpaint is fighting back

It’s rare for me to buy a momentum stock. And extremely rare for me to buy a company this small, with a market cap of around £383m as I write this (25 May).

Typically, I focus on big FTSE 100 companies, ideally with super-high yields, whose shares have been performing badly and look good value as a result. I bought Warpaint for a bit of balance, and a bit of excitement. But I also had the nagging feeling I was coming to the party too late.

For a while, the party carried on and I quickly found myself sitting on a 50% gain. Being a simple chap, I was happy.

On 17 September 2024, it hailed a record first half, with earnings soaring 66% to £12m. Group pre-tax profit jumped 75% to £10.9m. What’s not to like, I thought?

Volatile share price

Clearly, there was something not to like, because the shares dipped on the day. And they continued to slide, even though next day analysts at Berenberg hiked their target price from 580p to 680p.

On 6 February 2025, Warpaint forecast 2024 pre-tax profit would climb 33% to £24m. Markets saw that as a slowdown, as the slide continued. Suddenly, instead of being up 50%, I was down about 25%.

I can only assume that investors had baked in high growth expectations, and anything less than brilliant was going to make some think twice. I pored over the group’s reports, but didn’t see any major reason to sell, so I didn’t.

When Warpaint confirmed record full-year sales, margins and profits on 29 April, and a solid Q1 2025, the share price barely budged. Now suddenly it’s flying. And I don’t really know why.

Sales and profits remain strong

Obviously, Donald Trump rowing back on his trade war threats has helped. Even though chairman Clive Garston has said that “the US remains a modest part of the group’s overall business”, and Warpaint has “significant growth opportunities elsewhere”.

So what’s next? Brokers reckon Warpaint’s like-for-like revenues will grow 15% this year, and I guess that’s now the benchmark for success. If they fall short, my shares are likely to beat another retreat. But if they exceed that…

I can only assume that the Warpaint share price had got a little ahead of itself. Today, it seems to be in a better place. Consensus broker forecasts predict the shares will hit 666p in a year. That’s up 40% from today. It may not quite go gangbusters, but I’m optimistic for solid long-term growth from here. With a few bumps.

The post My favourite growth stock is up 30% in a month – is it about to go gangbusters again? appeared first on The Motley Fool UK.

Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

Why we like it: “The world of founder-led companies is among our favourite hunting grounds here at Hidden Winners. That’s because tenured management – with a significant stake in the business – often has cautious, long-term-oriented management principles. Partners Sam Bazini and Eoin Macleod – who combined own roughly 4-% of Warpaint London (LSE:W7L), evenly split – began their business careers selling cosmetics on market stalls. In 1992 they founded Warpaint, buying excess stock of cosmetics and fragrances from companies such as Revlon, and selling it on to discount retailers and wholesalers. While it was a nice business, the excess stock it was buying never included the most sought-after products, and to fill in the gaps and offer a complete cosmetics range to their growing customer base, the founders decided to create their own brand, W7.

“The key W7 brand – which focuses on the 16-34 age range – grew sales by 25% in the last six months and is responsible for around two-thirds of total sales. Its Technic brand – which focuses on the gifting market – grew by 34% in the same period and makes up about 32% of the sales pie. The company reckons that the key to its growth is expanding its presence into large retailers globally, growing sales with existing customers, while attracting new customers and growing its online presence. The business is both profitable and cash generative, with an exceptional recent and longer-term track record, and we’re given confidence that the owners/managers will steward the business (and their own investments) in a way that maximises long-term potential while avoiding catastrophic risk-taking.”

Why we like it now: Warpaint’s recent trading update was disappointing, with sales of £102m and profits of £24m falling slightly behind expectations of £105m and £24m respectively, but the share price fall looks potentially overdone. The market’s concerned that its growth rates aren’t sustainable – and if the trend of missed forecasts continues, that would be a worry – but the company boasts an exceptional longer track record of profit growth and could offer good value if its performance recovers. Warpaint is set to raise prices in 2025 and will benefit from the increasing scale of orders placed with suppliers as the business grows – potentially helping gross margins expand for a fifth consecutive year. Its strategy is “growing profitable sales of its branded products globally, while increasing overall margins” remains attractive in our view.

The post Just released: our 3 top small-cap stocks to consider buying before March [PREMIUM PICKS] appeared first on The Motley Fool UK.

Excited, I logged onto my trading account. Shares in the AIM-listed beauty specialist had already climbed by a third since I bought them last January. I expected more. Then it all went wrong.

The Warpaint share price plunged 20% on the day and has continued to slide. It’s now down 28% since those results. Over 12 months, it’s up just 2%. I’m right back where I started.

Long-term investors can still feel smug. The shares are up 388% over five years, but that’s not much use to me.

The shares have been routed

On 6 December, I proudly declared in these pages that I expected Warpaint would be “on the warpath in 2025”. Instead, it’s on the run.

Its W7 and Technic brands are selling well at Tesco and major retailers in the US and Europe, topped up by online sales from its own site.

February’s update showed the board expects full-year 2024 revenues to have climbed 13.8%, from £89.6m to £102m. Sadly, that was 4% below consensus. That earnings miss hurt.

Investors had priced in more growth with the shares valued at almost 30 times earnings at the end of last year. They’re cheaper today, trading at 22 times.

Other news was better. Pre-tax profits jumped almost 33%, from £18.1m to £24m. Revenue growth accelerated to 15% in January. Not fast enough to convince investors though.

Just three analysts cover Warpaint shares. All rate it a Strong Buy. They’ve set an average target price of 666p over the next year. If that comes off, it would mark a 65% increase from today’s 405p.

One of the more bullish analysts, Berenberg, even raised its target price slightly after the results, from 680p to 700p.

While accepting that revenues felt slightly short, Berenberg saw the share price slump as “an overreaction given our perception of the cyclicality of the slowdown”.

My AIM wasn’t true

It’s sticking with its convictions, citing the “sharp reacceleration in growth” in January and “a significant runway of revenue growth ahead”.

Warpaint’s now integrating the recent £14m acquisition of fellow cosmetics challenger Brand Architekts, which it called an “exciting and relatively low risk opportunity to further bolster growth opportunities”. Let’s hope so.

My big worry when buying the stock was that I’d missed its stellar early surge. Inevitably, I’ve blundered into the slowdown. I’m choked, but still think the market reaction’s been harsh.

My morale has taken a knock and with the cost-of-living crisis dragging on, so have my expectations. If I had some spare cash in my trading account I might throw it at Warpaint. But I’m not selling anything to raise the funds.

Happily, plenty of my other portfolio holdings are on the warpath this year.

The post My favourite UK growth stock has crashed 28%! Should I dive in and buy more? appeared first on The Motley Fool UK.

The first is engineering and construction specialist Costain Group (LSE: COST). Its shares are up a stunning 65.62% over the last 12 months. I bought them on 29 November last year and I’m personally up 71%, so I’m a happy bunny.

The Costain share price plunged as delayed and disputed infrastructure products forced the board to issue two profit warnings, in 2019 and 2020. Costs overran and it got embroiled in contract disputes.

The share price could do it again in 2025

I felt the worst was over last year and the company had one big factor in its favour – a fat and juicy bank balance. It boasted £194m of net cash against a market-cap of just £188m. With interest rates high, the money was rolling in, simply by leaving that pile in the bank. It’s since helped fund a £10bn share buyback.

Costain has continued to win contracts this year, driving the order book up to £4.3bn. On 4 December, it secured another worth £400m, with HS2.

Despite the share price surge, Costain still looks decent value, trading at 8.44 times earnings. Currently, three analysts have one-year share price forecasts, and they’ve set a median target of 145.5p. That’s up 38.6% from today’s 105p. All three label Costain shares a Strong Buy.

Costain isn’t without risks. It relies on a steady stream of large public infrastructure products and if they don’t come through sales will slump. That’s a worry given that the state of the UK’s finances.

Earnings can be bumpy as old projects end and new ones begin. Especially if there’s a gap between the two. Another risk is that it underprices when pitching for business. But I remain optimistic given the sound fundamentals.

Warpaint shares are on the march

Colour cosmetics specialist Warpaint (LSE: W7L) is another big portfolio winner. Its W7 and Technic brands are sold at Tesco and major retailers in the US and Europe, topped up by online sales from its own site.

Shares in this AIM-listed enterprise are up 64.92% over the last year. Over five years they’re up a staggering 507%. Sadly, I didn’t buy until 16 January this year, so I’m sitting on a relatively modest 28.9% gain.

On 29 November, broker Berenberg added Warpaint to its list of top stock picks for 2025. The same day, RBC Markets forecast revenue growth of around 13% a year through to 2026, while praising its “accessible, on-trend, quality cosmetic range at an affordable price”.

Affordability is the key word. That’s helped Warpaint grow steadily throughout the cost-of-living crisis.

Beauty’s a fickle business, of course. Another worry is that growth prospects are priced in, with the shares trading at 29.18 times earnings. They spiked after Warpaint posted record first-half sales and higher margins on 17 September, but soon retreated.

Warpaint has traded sideways for the last six months but I expect it to be back on the warpath in 2025.

The post I’m backing these 2 UK shares to soar again next year appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Gamma Communications

What it does: the company provides technology-based communication services across the UK and mainland Europe.

By Kevin Godbold. Gamma Communications (LSE: GAMA) is a big beast by AIM standards with a market capitalisation of around £1.57bn. But it didn’t start that way.

The firm arrived on the FTSE AIM market 10 years ago and has since delivered and well-balanced growth in revenue, earnings, cash flow and dividends. Not all AIM stocks are rubbish as this rising star proves.

City analysts expect more growth ahead, and the firm’s recent acquisitive expansion into Germany may help to provide it. But as businesses grow, they also face risks. Gamma has been winning for a long time and is perhaps due a setback or two.

One possibility is well-financed competitors may start to bite into chunks of the firm’s profitable niche in the market. Or maybe Gamma will make an acquisition that goes bad.

Nevertheless, recent updates have been positive and the outlook is upbeat. I’d focus on the growing business now.

Kevin Godbold does not own shares in Gamma Communications.

YouGov

What it does: YouGov is a market research company, with most of its revenue from the USA.

By Alan Oscroft. A few AIM stocks have struggled this year, with YouGov (LSE: YOU) one of the worst performers.

In June, the company warned that full-year earnings were likely to be 32% below the analyst consensus at the time. The shares crashed, and despite a few hints of life in the months after, they’re down near a 52-week low now.

My main fear is that we could get more bad news, as we might see more slowing demand across the sector.

But analysts expect solid earnings growth next year, even after downgrades. And they don’t think the dividend will suffer, though there’s only a 2.2% forecast yield.

We could be looking at a price-to-earnings (P/E) of 16.5 in 2025, dropping to under 12 by 2026.

AIM sentiment isn’t strong, so the short-term future could be erratic. But I see an attractive long-term valuation here.

With YouGov boosting its use of artificial intelligence, it might just be the one to put the AI into AIM.

Alan Oscroft has no position in YouGov.

Warpaint

What it does: Warpaint makes colour cosmetics under the W7 and Technic brands. It sells them at Tesco and major retailers in the US and Europe, plus its own website.

By Harvey Jones. The vast majority of my portfolio is culled from the FTSE 100, alongside a smattering from the FTSE 250. I hold just one AIM-listed stock but I chose well because it’s a goodie: Warpaint London (LSE: W7L).

Shares in the specialist supplier of colour cosmetics are up 80.16% in the last 12 months, and a blockbuster 614.84% over five years.

I bought Warpaint after spotting that it had repeatedly hiked earnings guidance, boasted ample cash reserves, no debt and a strong dividend track record.

On 17 September, I was pleased to see it post a 66% jump in first-half earnings to £12m, with group pre-tax profits up 76% to £10.9m.

The Warpaint share price jumped on the news, but has trailed downwards along with the rest of the AIM. Possibly because investors fear the Budget will hit inheritance tax breaks for the index.

Warpaint shares aren’t cheap, trading at 30.16 times earnings. The yield is just 1.67% but that’s largely down to the rocketing share price. I’m hoping sales will jump again as the cost-of-living crisis eases, unless consumers trade up to pricier brands when they feel a bit more flush. I doubt it, though. I’ll use the dip to top up my stake in November.

Harvey Jones owns shares in Warpaint.

Yü Group

What it does: Yü is an independent supplier of gas and electricity to businesses across the UK, and a smart metre installer. 

By Edward Sheldon, CFA. Yü (LSE: YU.) shares look really interesting to me right now. There are several reasons why. 

The first is that the company has been generating phenomenal top and bottom-line growth recently. In the first half of 2024, revenues grew 60% to £313m while earnings per share jumped 52% to 88p. 

The second is that the dividend is being increased at an unbelievable rate. For H1, the payout was increased by a whopping 533% to 19p. Currently, the yield is around 3.5%. 

Another reason is that the shares look dirt cheap. As I write this, the company’s price-to-earnings (P/E) ratio is just eight. 

In terms of risks, there are a few to be aware of. Yü operates in a competitive market. Meanwhile, it has no control over energy prices. 

I think the shares are worth a closer look right now, however. Given the low valuation and rising dividend yield, there’s a lot to like. 

Edward Sheldon has no position in ​​Yü Group.

The post Best AIM stocks to consider buying in November appeared first on The Motley Fool UK.

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Creo Medical   

What it does: Creo Medical is a medical devices company that makes instruments used in endoscopic surgery.    

By Ben McPoland. I think shares of Creo Medical (LSE: CREO) look interesting after falling 42% this year. The innovative small-cap company manufactures devices that enable minimally invasive surgical procedures.

Last year, it more than doubled its user base and analysts expect revenue to jump 28% this year to around £39.6m. Its recently launched Speedboat UltraSlim, a device compatible with most endoscopes, is expected to drive further sales momentum in the years ahead. 

On 18 September, Creo announced the sale of 51% of its European business to China’s Micro-Tech (a leading endoscopic instrument company). If approved, this will net the firm approximately €36.7m, which it will use to fund its growth.

Creo says this deal will “support our continued commercial growth in the [Asia Pacific] region through product registration and co-branding in China.” Opening up opportunities in the massive Chinese healthcare market could prove to be very lucrative.

The main danger here is that the company’s still in growth mode and not yet profitable. It has a cash-flow break-even target for 2025, but the lack of earnings still heightens risk. 

Nevertheless, with the market cap now at £95m (as I write), the stock looks attractive to me given the growth potential.

Ben McPoland owns shares in Creo Medical.

hVIVO

What it does: Specialist contract research organisation (CRO) focused on human medical trials of vaccines and antivirals.

By Mark David Hartley. hVIVO (LSE: HVO) is a clinical research organisation that serves biopharma companies. It recruits volunteers for clinical trials through its FluCamp database, which boasts over 320,000 participants. It can be a risky business, as clinical trials face the threat of medical complications or even fatalities. This could cause reputational and financial damage to the company. 

The company’s latest results revealed a 30% year-on-year increase in revenue and 67% EBITDA growth, translating to a 24.5% margin. Basic adjusted earnings per share also saw a 30% increase. However, with a price-to-sales (P/S) ratio of 3, revenue is lagging the share price. 

Still, its balance sheet looks solid, with cash up from £31.3m to £37.1m in H1. Looking ahead, management anticipates an 11% increase in full-year revenue with a projection of at least £100m in revenue by 2028. That’s a compound annual growth rate of about 14%.

Mark David Hartley does not own shares in hVIVO.

Serica Energy

What it does: Serica is one of the top 10 oil and gas producers in the UK North Sea, with an output of more than 40,000 barrels per day.

By Roland Head. Shares in North Sea oil and gas producers have been hammered by the falling oil price and uncertainty over government energy policy. Serica Energy (LSE: SQZ) is no exception.

The company’s share price has fallen by 40% so far this year. The shares now trade on just three times forecast earnings, with an 18% dividend yield.

The Autumn Budget on 30 October may provide some welcome clarity. In the meantime, we know that Serica had $131m of net cash at the end of June.

Serica’s projections suggest that the company could generate another $500m of surplus cash from its current production by the end of 2027.

My main worry is that management may blow some of the group’s cash pile on a misguided foreign acquisition.

However, the company recently confirmed its support for the dividend, declaring an unchanged interim payout. I think the shares just look too cheap right now.

Roland Head owns shares in Serica Energy.

Warpaint

What it does: Warpaint sells colour cosmetics under its own brands, W7 and Technic. It sells through major retailers and via its own website.

By Harshil Patel. Warpaint (LSE:W7L) is going from strength to strength. Not only are sales and profits rising, but its profit margin is too.

Achieving this hat-trick is impressive and it’s what makes this AIM stock stand out from the crowd.

Its half-year pre-tax profit jumped by 76% from £6.2m to £10.9m. The company’s sales are weighted towards the second half of the year due to its gifting attributes. So, I’d expect more growth to come.

There are plenty of opportunities, both from existing retailers and through new major shops which it is currently in discussion with.

Warpaint offers many of the qualities that I look for in the best shares. Namely, it offers a return on capital employed of 42%, over 20% operating margin and a solid balance sheet.

There is competition in this space, but it looks like it’s taking market share from rivals.

I wrote about this Aim stock a year ago, and although its share price has doubled since, I still like it today.

Harshil Patel owns shares in Warpaint.

YouGov

What it does: YouGov is a British internet-based market research and data analytics firm with global operations.

By Muhammad Cheema. YouGov’s (LSE:YOU) 2024 has been torrid with its shares falling by almost 62%. Investors were particularly spooked by a profit warning in June, which caused a one-day drop of 46%. Debt of £214m on its balance sheet is also risky and doesn’t ease concerns.

However, I believe this has been blown way out of proportion. On its later trading update on 6 August, it guided for revenue of £327-330m and operating profit of £43-46m. For context, FY23 revenue and operating profit were £258m and £44m, respectively.

This doesn’t warrant the share price fall in my opinion and presents a potential buying opportunity for investors to consider. Revenue growth remains strong and even though earnings are broadly in line with last year, historically the company has a strong track record of increasing this. This might just be a blip in performance, especially as the firm is in a great position to capitalise on the rise of AI.

Muhammad Cheema does not own shares in YouGov.

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