Add a splash of Warpaint

The paint'n'powder supplier, whose lead brand is W7, added to its line-up with November's acquisition of Retra. The purchased company focuses on the gifting market, selling gift sets to high-street retailers and supermarkets. The £18.2m acquisition was funded through a share placing of 11.2m shares at 190p each, raising £21.2m.

Last week’s trading update for 2017 gave reason to be optimistic. Management says full-year results should be in line with expectations and that the acquisition of Retra is progressing well. The company also has a degree of flexibility when it comes to manufacturing its cosmetics. It outsources all production, so if one producer ups its prices, Warpaint can easily switch to another that will do the same thing for less.

Analysts at Stockdale Securities, Warpaint's adviser, say the shares should trade at 300p, well above the current 225p. That's based on a discounted cash flow analysis, using 11 per cent as the weighted target return and 2 per cent as the long-term growth rate. That growth rate may seem a bit low for a small and fast-growing company, but the analysts do call it a conservative estimate, so there should be potential for upside.

That said, the conservative estimate also reflects the fact that make-up is a competitive market. But Warpaint aims for the budget end of the spectrum, and so could benefit if UK customers, who account for almost half its sales, trade down as their spending is squeezed. Simultaneously, Warpaint's bosses claim to be aware of growing consumer trends and have recently released its 'Very Vegan' line of make-up. Good for the animals and good for your wallet.