There is no doubt about the fact that some some sectors have fared far worse than others during the pandemic. One of them is hospitality. Covid-19 restrictions meant that bars and restaurants were open only for a limited amount of time. As a result, many of them are yet to see their financials get back to pre-pandemic levels. But this restaurant group, which also happens to be a penny stock, is an exception.
Fulham Shore’s impressive results
I am talking about the AIM-listed Fulham Shore (LSE: FUL), which owns brands like Franco Manca and Real Greek. The UK based company owns 74 restaurants at present and in its latest results statement, has mentioned that it has plans to open up 21 more. This in itself is an achievement, in my view, at a time when many restaurants are still struggling. And there is more to like about it.
The company’s performance for the six months ended 26 September 2021 was impressive. Its revenues more than doubled from the same period in 2020. And it even swung back into post-tax profit, compared to a loss suffered last year. I find this particularly encouraging considering that 2021 has also been a hard year for restaurants. As Fulham Shore said, it operated with no Covid-19 restrictions for only 10 of the 26 weeks of this latest half-year. Further, even if we consider that 2021 has still been comparatively better than 2020, the fact is that despite restrictions, its revenues are still 10% higher than the same six months in 2019.
The company also has a positive outlook and it has seen revenues in October and November higher than those during the corresponding months in 2019. It now expects to perform ahead of both management’s and market expectations for this year. And it has expansion plans for the next year too.
Strong share price performance
Its share price performance so far has also been encouraging. Even though recently it has moved sideways, over the past year, the stock is up almost 70%. Much of the increase was seen starting with the stock market rally of November, 2020. And the stock was broadly rising until September this year. But I reckon the fact that the last few months have been a bit challenging for broader stock markets has impacted it too. I think there is a possibility that after its good results, the company’s share price could start inching up again.
My takeaway
Of course the spread of the Omicron virus could slow down the upward climb. It has created much uncertainty, which is more likely to impact the likes of restaurant stocks than others. Also, the company has not been consistently profitable over the past few years, which is something to be cautious about. Still, for now, it appears to be in a good place. And if the recovery continues, I feel this would be among the penny stocks to make a good portfolio addition for me in 2022.
