One of the best penny stocks to buy now for my portfolio is Staffline Group (LSE:STAF). Here’s why I’d add the shares to my holdings.
Staffing and recruitment
Staffline is one of the largest recruitment and training providers in the UK. It operates via multiple divisions. One of these is recruitment, through which it provides flexible workers, approximately 40,000 staff per day on average, to around 450 client sites. This is to a wide range of industries. It also has a training division where it helps people gain new skills and qualifications in order to obtain employment at different levels.
Penny stocks are those that trade for less than £1. As I write, Staffline shares are trading for 54p. At this time last year, the shares were trading for 51p, which is a 5% return over a 12-month period.
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Why I like Staffline shares
The pandemic has led to many workers either reconsidering their career options, or looking to retrain. Also, recent statistics compiled by the government show that employment numbers in recent months have surpassed pre-Covid levels. I believe that firms like Staffline, with dedicated resources towards putting workers in jobs, could be very busy.
It seems the pandemic has resulted in a shift whereby people are looking to re-enter the labour force. Training and recruitment will be essential to this. Staffline could see its performance increase based on this data and paradigm shift.
Prior to the pandemic, Staffline had a consistent track record of performance. I do understand that past performance is not a guarantee of the future, however. Many penny stocks do lack a track record of performance. Looking back, it reported revenues of over £1bn between 2017 and 2019. Its revenue levesl in 2021 were slightly less, due to the pandemic and restrictions.
Coming up to date, Staffline reported a post-close update at the end of last month for the year ending 31 December 2021. It reported revenue and profit had increased compared to 2020 levels. A previous position of debt has now been leveraged into a position of net cash to support a robust balance sheet. Full detailed results are due in the coming months. It seems to me Staffline is benefitting from the current rising demand for workers here in the UK.
Penny stocks have risks
The labour market is cyclical, which means there is a higher element of risk. For example, Staffline could see trends change once more and workers choosing to stay put in their current roles. For example, macroeconomic uncertainty often leads to workers looking for stability. This could result in less people looking to make changes to their employment. This could affect Staffline’s performance and any growth ahead.
Overall, I like Staffline shares for my portfolio. I believe its profile, presence, and diversified business model should support growth ahead. The pandemic has changed the way many people look at employment and career prospects, according to data published. I believe Staffline will return to pre-pandemic performance levels, and eventually surpass these too. It looks like a good penny stock option for my holdings at current levels.
