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In what’s turn into a really acquainted story, Rolls-Royce shares proceed to assist energy the FTSE 100 skywards this 12 months. However whereas the engineer is up 70% since 1 January, some prime UK penny shares have delivered even higher returns up to now in 2025.
Take Staffline (LSE:STAF), as an example, which has greater than doubled in worth. Whole value beneficial properties are 107% for the reason that flip of the 12 months.
Right here’s why I feel the recruiter is a prime small-cap share to think about as we speak.
Sturdy outcomes
Within the context of a weakening home labour market, Staffline’s efficiency has been outstanding. The enterprise — which provides round 35,000 blue collar employees within the UK, and 4,500 in Eire — mentioned in Could that it continued to get pleasure from “sturdy momentum” within the first 4 months of the 12 months following a strong 2024.
Gross revenue was up 6.2% within the interval, it mentioned, pushed by sturdy demand for non permanent and company employees. With job vacancies throughout Britain having fallen each month since mid-2022, that’s no imply feat.
This energy displays partially Staffline’s nice relationships with blue-chip purchasers in defensive sectors, like Tesco, Sainsbury’s, Bunzl, and Pepsico. In Could, Staffline additionally introduced a three-year contract with a “main foods and drinks logistics supplier” that it mentioned “materially” improves its outlook for the interval.
Low cost as chips
Maybe unsurprisingly, this information alone gave Staffline’s share value an additional dose of jet gas.
But, regardless of this 12 months’s value beneficial properties, the employment specialist’s shares nonetheless supply wonderful worth for cash as we speak, at 48p. Earnings are anticipated to rise 17% in 2025, leaving Staffline buying and selling on a sub-1 price-to-earnings-to-growth (PEG) ratio of 0.7.
This cheapness maybe displays the broader state of the UK economic system and the threats it poses to recruiters. Within the case of Staffline, it’s vital to notice its massive publicity to extra cyclical sectors like manufacturing and gross sales, and what this might imply for short-term earnings.
Companies on this sector additionally face challenges following adjustments in final October’s Finances. An increase in each the Nationwide Dwelling Wage and employers’ Nationwide Insurance coverage contributions may crimp margins and influence demand from its purchasers.
A prime development share
Encouragingly, nevertheless, Metropolis analysts count on Staffline’s earnings to proceed rising at breakneck pace. Metropolis brokers predict earnings to rise one other 51% in 2026, pulling the agency’s corresponding PEG ratio even decrease, to 0.2.
It additionally means the penny inventory’s price-to-earnings (P/E) ratio of 12.8 occasions for 2025 falls to a bargain-basement 8.5 occasions for subsequent 12 months. Whereas Staffline shares are maybe high-risk within the present surroundings, these low valuations present a margin of security.
It’s additionally good to see the enterprise nonetheless strengthening its stability sheet, giving it extra respiration room to climate an business downturn. The sale of its underperforming PeoplePlus unit in February offers Staffline — which swung again to a internet money place in 2024 — an additional £6.9m enhance.
For traders searching for prime penny shares, I feel it’s value a critical look.
