Robust markets

Staffline Group (LSE: STAF) is admittedly in some danger as the UK economy cools. If breakneck inflation persists and companies struggle then demand for its recruitment services could tank.

That said, I’m encouraged by the resilience of Britain’s labour market so far. And this could still encourage me to buy the penny stock today.

Indeed the Recruitment and Employment Confederation announced this week that, “Demand for permanent staff remains buoyant despite increased economic concerns”. Consumer price inflation hit fresh 30-year highs in April yet companies’ hiring intentions for the short-to-medium term has continued to rise.

“Strong start”

Staffline itself celebrated the ongoing robustness of the UK jobs market a month ago as it described the “strong start” it had made to 2022.

The company added then that while economic uncertainty had increased, its “strong market share in resilient sectors” like food distribution, e-commerce, and logistics helps give it decent earnings visibility.

City analysts believe conditions will remain favourable for Staffline as well. They think the penny stock’s profits will soar 246% year-on-year in 2022. And this leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.1.

Any reading below one suggests that a stock could be undervalued. At these prices I think Staffline is a steal.

Rewards vs risks

Pub operator Marston’s (LSE: MARS) is another penny stock that could suffer as the cost of living crisis intensifies.

It’s a danger that brewing giant Heineken highlighted this week. On Wednesday it said that it the impact of increasing inflationary strain on household disposable income poses “a consequent risk to beer consumption later in the year”.

In the UK, where all Marston’s pubs are located, inflation is tipped to peak at 8.7% in 2022 by the Office for Budget Responsibility. That could really weigh on drinkers’ budgets.

Another cheap penny stock

Naturally the danger of ballooning living costs to pub operators is particularly high. The cost of a pint or a glass of wine at one of Marston’s inns is far more expensive than what you or I would pay for a bottle at the supermarket to drink at home.

Still, as a long-term investor I’m tempted to buy Marston’s for my portfolio. I think a forward price-to-earnings (P/E) ratio of 9.8 makes it too cheap to miss.

Data shows that Brits continue spending larger proportions of their discretionary income on leisure activities like drinking and eating out. This is an established trend that I think Marston’s will profit handsomely from when those current dangers pass.

City analysts believe the penny stock will continue recovering from the damage wrought by Covid-19 lockdowns, too. They think Marston’s will bounce back into profit this year (to September 2022) following two years of losses and grow earnings 38% in financial 2023 as well.

Protection from rising inflation

I think buying property stocks is a good way to protect myself against rampaging inflation. This is because rents by and large rise in line with broader prices. It’s a quality that not all UK stocks share.

I think Empiric Student Property (LSE: ESP) in particular could be a top buy right now. As well as helping me guard against inflation today, it could make me a lot of cash in the years ahead as student numbers jump and the need for dedicated accommodation increases.

Latest figures from the Higher Education Statistics Agency showed the number of UK students leap 8% in the 2020/2021 academic year. The number of full-time first-year students also grew at the fastest pace on record. These numbers illustrate the massive opportunity for Empiric Student Property.

Chunky dividends!

City analysts are expecting the penny stock’s earnings to double year-on-year in 2022. Consequently the company trades on a forward PEG ratio of just 0.3.

I like Empiric Student Property too because of its healthy dividend yields. These sit at 3% and 4.1% for 2022 and 2023 respectively. I’d buy it despite the threat that Covid-19 poses to student enrolment levels in the near term.

Another dividend-paying penny stock to buy

Speaking of high dividend stocks, Centamin (LSE: CEY) is a gold stock whose big yields make it an attractive investment target. The forward yield here sits at a huge 5%.

There’s a couple of good reasons I think Centamin is a great buy today. The first is that I believe gold prices could be on the verge of soaring again as inflationary pressures grow. Demand for gold rises when the value of paper currenices come under scrutiny.

This week Bank of America said that it expects gold to hit $2,175 per ounce in the current climate. That’s around 100 bucks higher than summer 2020’s record peaks.

Production boost

I also like gold stock Centamin because of the steps it’s taking to boost production over the medium-to-long term. The company plans to deliver 500,000 ounces of the shiny stuff each year from its Sukari flagship mine over the next decade. Centamin is on track to dig between 430,000 and 460,000 ounces of gold from its Egyptian asset in 2022.

Centamin’s a great way to make money from a strong gold price in my book. But of course there’s no certainty that precious metal prices will rise. Rapid central bank rate hiking and a robust rise in the US dollar could send gold prices lower.

However, on balance I think — as a long-term investor — that the benefits of owning Centamin shares offset the risks. I also think its undemanding forward P/E ratio of 12.2 times makes the penny stock a great buy (it’s expected to enjoy a 10% rise in annual profits this year).

However, they can also come with more risk than larger blue-chip stocks. Unlike their larger peers, smaller companies may not have the checks and balances in place to detect and deal with significant challenges. 

As such, I am not willing to include any old penny shares in my portfolio. I am looking for corporations with substantial competitive advantages and robust balance sheets. 

Both of the companies outlined below exhibit these qualities. I would not hesitate to buy both for my portfolio with an investment of £1,000 today. 

Penny shares to buy for growth

As the UK economy begins to recover from the pandemic, labour shortages are becoming a significant issue for many companies. I think this is the perfect environment for the temporary staffing operation Staffline (LSE: STAF). 

This micro-cap stock has lost over £100m during the past four years. Still, analysts are expecting a profit in 2021 and for 2022. Based on current estimates, the stock is trading at a forward price-to-earnings (P/E) multiple of just 7.7. Management has also cleaned up the balance sheet in recent years. The group now has a net cash position. This gives the company lots of financial flexibility to capitalise on opportunities as they emerge. 

Unfortunately, this is a highly competitive market with razor-thin profit margins. Overcoming these issues will be some of the biggest challenges the company has to deal with going forward. 

Despite these headwinds, I would buy the outfit for my £1k portfolio of penny shares today. 

Consumer demand 

Premier Foods (LSE: PFD) is another company that has been working hard to rebuild itself over the past couple of years. The business made a series of strategic missteps before the financial crisis, and it has taken it more than a decade to return to growth.

With a strong balance sheet and reconfigured pension plans, the establishment is in a better position than it has been for over 10 years to capitalise on growth opportunities.

City analysts are expecting earnings to grow by a double-digit percentage in the 2022 financial year, and further growth is expected in 2023. A key area of development for the business is the international market, where management is investing significant sums to capture market share. 

This is a great opportunity, but it could also be a significant risk. If the company expands too far, too fast, it could be an expensive mistake. This is something I will be keeping an eye on over the next few years. 

Even after taking this risk into account, I would be happy to acquire Premier for my portfolio of penny shares with £500 today. In a portfolio alongside Staffline, I think the company will help me build exposure to two fast-growing sectors of the economy. 

A top contrarian share to buy

Recruitment and training business Staffline Group (LSE: STAF) has fallen to its cheapest for a year in recent sessions. As I type, it remains 9% lower than it was 12 months ago too. Investors have been selling because of fears that soaring inflation will derail the economic recovery and, by extension, the labour market.

This is a risk investors like me need to take seriously, though encouraging news surrounding the jobs market is helping to soothe my fears. And so I’m considering buying Staffline shares following the recent dip.

Last month the penny stock lauded its “strong new business pipeline” and said that important sectors like automotive, manufacturing, aerospace and travel are expected to continue recovering in 2022.

Since then, the Recruitment and Employment Confederation (REC) has echoed the positive outlook for the jobs market too. This week, it said hiring intentions for both permanent and temporary staff have continued to improve in recent months.

It might not all be plain sailing for Staffline however. The recruiter could suffer if labour shortages leave it with a lack of candidates to market. However, I still believe the possible rewards of me owning this particular penny stock outweigh the risks.

At current prices of 52p per share Staffline trades on a forward price-to-earnings (P/E) ratio of just 11 times. This offers serious value for money, in my book.

Another dirt-cheap penny stock

Building products manufacturer Brickability Group (LSE: BRCK) has also fallen sharply in recent days. And, like Staffline, it also offers attractive value for money today. At 93p, the business trades on a forward price-to-earnings growth (PEG) ratio of 0.3. This is well below the benchmark of 1 that suggests a stock could be undervalued.

Brickability’s share price has dropped 7% in value in just the past seven days. It’s slumped amid broader risk aversion on financial markets and fears that central bank action in the months ahead could hit demand for its product. Higher interest rates usually translate to a slowing of the housing market.

It’s still important to remember that Brickability’s shares are still more than a third more expensive than they were a year ago. This is because the outlook for UK house prices remains rock solid despite the risk created by higher interest rates. Indeed, Brickability said last month that its order book reflects the sense of optimism in the housebuilding industry.

I’m confident that lending conditions for first-time buyers will remain ultra supportive for years to come. And as a consequence, I think home construction levels will need to pick up to accommodate them.

Against this backdrop, I think brickmaker Brickability could deliver terrific profits for its shareholders.

Toasting a recovery stock

Revenues are bouncing back encouragingly at Marston’s (LSE: MARS) following the shock of Covid-19 lockdowns. Like-for-like sales were up 1.3% in the eight weeks to 27 November, latest financials showed. I expect trading momentum to steadily pick up too as concerns over the pandemic recede.

Don’t think that Marston’s is just a great buy for the post-pandemic rebound, though. As a long-term investor, I’m encouraged by data showing that Brits have been spending a greater proportion of their salaries on eating and drinking out in recent years. It’s a trend that recent studies suggest remains very healthy.

My main concern for Marston’s looking ahead is the prospect of soaring beverage costs. Beer giant Heineken has just warned that prices for its fizzy product could rise to reflect a 15% rise in costs. Pub operators will either have to absorb this higher cost and watch margins come under pressure, or they’ll pass these increases onto the customer and risk a revenues slump.

Too cheap for me to miss?

That being said, at current prices, I still think Marston’s shares could be too cheap for me to miss. The business is expected to bounce back into profits in this financial year (to September 2022). This leaves the penny stock trading on a forward price-to-earnings ratio of 10.8 times.

I’d also buy Marston’s because its dividends could be about to explode again. Marston’s paid dividends well above the market average before Covid-19 forced it to cease shareholder payments altogether. And City analysts anticipate that the company’s expected return to profit this year will also result in an immediate return to dividend payments.

A 0.7p per share dividend is forecast for financial 2022, resulting in a modest 0.8% yield. The expected yield leaps to 2.3% for next year, though, thanks to a predicted 1.9p dividend. Like all forecasts, these could change based on future developments and are not something to rely on. But I think Marston’s could prove a great buy to add potentially strong earnings and dividend growth to my portfolio.

A penny stock for the strong jobs market

Staffline Group (LSE: STAF) might not have things all its own way if the domestic economy really starts to struggle. But right now the penny stock — which provides recruitment and training services to business — is doing a roaring trade thanks to the buoyant jobs market. Full-year gross profits at Staffline rose 11% in 2021.

Latest signals show that job hunting activity in Britain continues to strengthen, too. New data from Ipsos shows that almost half of all workers have searched for new employment in the past three months. The cost of living crisis suggests that the number could keep climbing as well as people seek better pay.

Fellow recruiter Hays saw like-for-like fees in the UK and Ireland leap 33% between October and December. And permanent hirings here rose 69%, illustrating the strength of business confidence recently. This gives me confidence that Staffline could continue to deliver meaty profits growth. It’s one of several top growth stocks I’m considering buying today.

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.

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.

What’s up with the Staffline share price?

Staffline is trading at 55p right now, having seen a spectacular fall since September last year following its half-year results. The company did report a loss at the time, but it was minuscule compared to the loss it had seen in the year before. In other words, it looked like it could turn around. In an article I wrote on the company after the results were released, I was keen to buy it. My understanding was that its share price could rise further, though perhaps not at the same pace as before. But in the ensuing months, its share price actually fell.

Strong trading update 

Since I have not bought the stock yet, I actually think it is a good opportunity to buy it now. The first big reason is that its latest trading update is encouraging. Its revenue has increased only by a small 1.6% for the year ending 31 December 2021, but its underlying operating profit is up by a huge 108% compared to the year before. Staffline also has a sunny outlook. It says it has exceeded expectations of both profitability and cash flow during the year. And it expects the momentum to continue into the next year as well. It is also confident of its prospects in the medium and long term. 

Dwindling risks

Next, the company’s earlier concerns about macroeconomic uncertainties seems to have disappeared. And I can see why. The UK economy has returned to pre-pandemic levels recently and its prospects look good too. The Brexit-related limbo that lingered for years is a thing of the past as is the worst of the pandemic, at least that is how it appears. The company also point to a pick up in the travel sector, which is one of its historically strong areas. 

Competitively priced penny stock

Also, after its share price fall, the company’s market valuation looks particularly good. It is not a profit-making company, so we cannot consider price-to-earnings (P/E) here, but the price-to-sales (P/S) ratio is 0.1 times. Not only is this almost nothing, it is way smaller than that of its peers too. I think this in itself makes a case for me to buy the stock. The fact that its share price is quite low in absolute terms as well, considering that it is a penny stock, is another reason to like it. I will buy it soon. 

Staffing star

Investing in UK-focussed cyclical shares is undoubtedly — at least on a general level — a risky endeavour as British GDP slows. There are however pockets of top stocks I think could still thrive this year. Staffline Group (LSE: STAF) is one of these that I’m considering buying: it’s a penny stock which provides recruitment and training services for companies.

There’s a raft of data showing that 2022 will be a big year for job migration. The number of people seeking to further their careers following the Covid-19 shock, or who are seeking a better work/life balance, is tipped to continue soaring. A fresh survey this week shows that more than half of Britons are considering quitting their job this year. It seems like vacancy fillers such as Staffline could be extremely busy.

A strong recent trading update from industry rival Hays has bolstered my confidence in Staffline for 2022. It said that its net fees were up 33% in the final three months of last year, with fees for permanent hiring leaping 69% year-on-year thanks to strong business confidence.

Bear in mind, though, that Staffline isn’t completely immune to broader economic conditions. Individuals could choose to stay put and firms could put off hiring if the economy worsens significantly and confidence sinks.

Ready to fly

Raven Property Group (LSE: RAV) is a UK share that commands a meaty premium today. For 2022 the company — which specialises in letting out warehousing and logistics properties in Russia — trades on a forward P/E ratio of 32 times.

This sort of sky high valuation reflects investor expectations of strong earnings growth. But it also leaves Raven Property’s share price in jeopardy of a sharp fall if these profits hopes start to look a tad shaky. For example, a shortage of suitable assets for Raven Property to acquire could see the business struggle to make progress on its growth strategy. The property company has previously made reference to “strong competition” in Moscow, for instance.

This doesn’t mean I couldn’t be tempted to buy Raven Property for my portfolio, though. Indeed, the pace at which Russia’s e-commerce market is growing still makes it an attractive buy despite that premium.

Researchers at Statista think the country’s online shopping sector will be worth $69.8bn by 2025, up more than $28bn from what the body thinks it will be valued at this year. In this climate Raven Property can expect demand for its properties to heat up.

One final thing: at current prices Raven Property offers up a meaty 5.1% dividend yield. This beats the broader 3.5% average for UK shares by a large margin and reinforces its appeal to me. I think it could be a great penny stock for me to buy and hold for the long haul.

Christopher Ruane: Lookers

Second-hand car sales dealerships aren’t always the best place to look for a bargain. But I think things could be different at Lookers (LSE: LOOK), which sells used and new vehicles.

Several directors have added to their holdings in December. The chief executive spent £29,000 doubling his own position. I think such confidence may be merited. The Lookers share price has been treading water even though third-quarter results beat expectations. Supply issues could hurt new car sales, though, threatening revenues.

Christopher Ruane does not own shares in Lookers.

Rupert Hargreaves: Next

My top share for January is the retailer Next (LSE: NXT). I would buy this stock for my portfolio as it is a retail champion. It has consistently outperformed the rest of the UK retail industry and its own expectations in the past, and the firm is not slowing down.

Management is investing heavily to maintain the group’s growth rate. As the UK economy continues to recover, I think Next could prosper. Risks that could hold back growth include wage inflation and the supply chain crisis.

Rupert Hargreaves does not own shares in Next.

Niki Jerath: Reckitt

My stock pick for January 2022 is Reckitt (LSE: RKT). The share price is up over 2% in the past month. I could be wrong, but it might go higher.  

I expect demand for its consumer goods brands will rise over Christmas and into the New Year, no matter what happens over the festive period.  

Sales of cleaning brands such as Dettol are sure to rise in reaction to the unfortunate outbreak of the Omicron Covid variant.  

I’m also confident that its other brands such as Strepsils and Nurofen will be useful in January as we nurse our New Year’s hangovers!  

Niki Jerath does not own shares in Reckitt.

Dylan Hood: Lloyds

My best share for January is Lloyds (LSE: LLOY). At the time of writing, Lloyds shares are trading at 46p. The stock has performed well for investors throughout 2021, delivering 33% year-to-date returns.

The main reason I like the look of Lloyds is because of its high growth plans under new chief, Charlie Nunn. The new strategy aims to vastly speed up growth in areas of the business such as property, wealth management, and commercial banking.

If this plan pays off, I think we could see some great growth in the Lloyds share price throughout January 2022 and beyond.

Dylan Hood does not own shares in Lloyds.

Stephen Bhasera: Liontrust Asset Management

Liontrust Asset Management (LSE:LIO) is arguably the best asset management company listed on the London Stock Exchange right now. The results speak for themselves as its share price has appreciated by 58% over the past year.

This company employs several strategies across multiple funds to produce superior returns for investors. With over £30bn in assets under management, its latest half-yearly results revealed revenues of £109m. Forecasts indicate that Liontrust’s growth will be slightly slower in 2022 than the past five years but it is still expected to drastically outperform competitors and so remains a solid pick.

Stephen Bhasera has no position in Liontrust.

Edward Sheldon: Hargreaves Lansdown

My top stock for January is Hargreaves Lansdown (LSE: HL), which operates the UK’s largest investment platform. It underperformed in 2021 and I think the share price weakness has created an attractive buying opportunity.  

There are several reasons I like HL. In the short term, the company looks set to benefit from higher interest rates. That’s because it earns income on its clients’ cash savings. Meanwhile, in the long run, it should benefit as equity markets continue to rise and more Britons save and invest for retirement. It’s worth noting that portfolio manager Nick Train believes that Hargreaves Lansdown represents “one of the greatest UK growth stock bargains over the next decade.”

There are risks to consider here, of course. One is competition from rivals such as AJ Bell (which just launched a new commission-free app) and Freetrade.

Overall, however, I think this FTSE 100 stock looks attractive right now.

Edward Sheldon owns shares in Hargreaves Lansdown.

Andy Ross: Staffline 

Shares in blue collar recruiter Staffline (LSE: STAF) have struggled for much of the last quarter of 2021, after hitting a high point in mid-September. On the flipside, that has made the valuation pretty compelling with a forward P/E ratio of 14. The EV to EBITDA ratio – another measure of valuation – is 7.77, which is low and indicates the shares are potentially undervalued.  

Staffline is a recovery share. It has new executives in place who are looking to build back better after a share price collapse in recent years, following poor leadership under previous management.  

Andy Ross owns shares in Staffline.

Zaven Boyrazian: Focusrite

Focusrite (LSE:TUNE) provides the music industry with bleeding-edge audio equipment and software. Under its numerous brands, the firm can cater to professionals and hobbyists alike.

The group definitely operates in a niche market with plenty of competitors targeting the same audience. However, thanks to some smart bolt-on acquisitions, and an impressive Net Promoter Score of 74, the company seems to be staying on top.

With double-digit revenue and earnings growth even with live events being delayed, Focusrite looks primed to deliver impressive returns, in my opinion.

Zaven Boyrazian does not own shares in Focusrite.

Paul Summers: Computacenter

I think there could be further upside to the Computacenter (LSE: CCC) share price in 2022. The company has thrived in recent years as corporate and public sector organisations have rushed to update their IT infrastructure. With no end to Covid-19 in sight, I can’t see this momentum slowing just yet.

Clearly, much depends on whether product supply shortages highlighted in October have worsened. We’ll find out in January’s trading update. At 18 times forecast earnings, however, Computacenter’s valuation doesn’t seem excessive given its consistently great returns on capital. There’s a secure 2.2% dividend yield too.

Paul Summers has no position in Computacenter

Roland Head: Morgan Advanced Materials

My top stock for January is Morgan Advanced Materials (LSE: MGAM). This British industrial firm has been making equipment for metal foundries and parts for electric motors (among other things) since the late 19th century.

Growing demand from electric transport and renewable energy is helping to drive new growth. Although there’s always the risk that an economic slump will hit demand, I believe Morgan’s long pedigree and market share should provide some protection for shareholders.

Recent management guidance is positive. I think the shares look good value on 12 times forecast earnings and would consider buying them for my portfolio.

Roland Head does not own shares in Morgan Advanced Materials.

G A Chester: British American Tobacco 

British American Tobacco (LSE: BATS) is a highly cash-generative business, and unhealthy products and regulatory risk aren’t deal-breakers for me. 

It’s my choice for  for January after its recent trading update. It’s making excellent progress on its £5bn revenue target for new category products. It’s also delivered £1bn cost savings one year ahead of plan. Lower debt gives it greater capital allocation flexibility going into 2022, and management said: “We recognise the clear value of a share buyback at the current valuation.” 

In addition to a running dividend yield of around 8%, I’m expecting the company to announce a buyback programme with its annual results on 11 February. 

G A Chester has no position in British American Tobacco.

Royston Wild: National Grid 

I think grabbing some defensive stodge could be a good idea for January. As I type, Covid-19 restrictions are being tightened Omicron infection rates balloon. It’s been suggested that full lockdowns could return after Christmas too. 

The economic implications of these measures for many UK shares could prove catastrophic. But the public health emergency isn’t something FTSE 100 stock National Grid doesn’t have to worry much about. It’ll be needed to keep Britain’s electricity network running regardless of how the pandemic is panning out. This is why I think it could be a top stock for today.

Oh, and at recent prices National Grid offers jumbo dividend yields just shy of 5% for the short-to-medium term. 

Royston Wild does not own shares in National Grid.

How to choose penny stocks

But not all penny stocks are equal. Some stocks are so cheap because the company does not have strong prospects and its share price has just dwindled to penny stock territory. That is not the kind of stock that I want to hold in my portfolio, because it is clearly a losing game. Yet there are others that are penny stocks today, but could explode over time. Here I explore two stocks that I think could have such potential and in which I would gladly invest £1,000 today. 

Staffline sees better prospects

The first stock is recruitment services provider Staffline (LSE: STAF). When I last wrote about it in September, its share price had shown an unbelievably positive trend over the past year. It had actually tripled! A couple of months later, it has seen a correction from those levels. It has, however, more than doubled in the past year and is around 62p right now.

Considering that labour market trends in the UK are largely positive right now, I think it might start strengthening again. In fact, I think it could lose its penny stock status and go back to pre-pandemic levels soon. There some stumbling blocks, though. It is not a profitable company and labour shortages could hold the sector back too. On the whole though, I think this is a good growth stock to buy today. 

Marston’s is a pub stock to buy

Another penny stock I like is Marston’s (LSE: MARS). At a share price of 77p, the stock has actually lost some of the gains made right after the stock market rally that started last November. Its share price actually rose above 100p earlier this year, before dropping, probably on continued uncertainties in overall conditions. 

However, I think in the coming months it could rise again. Its latest results showed that sales were higher than they had been pre-pandemic for the quarter ending 2 October. And importantly, social distancing is a thing of the past now as vaccinations strengthen and the intensity of Covid-19 cases diminishes. 

My only problem with the stock is that it was loss-making even in the year before the pandemic. And now the company has posted two successive years of losses. Nevertheless, its latest six monthly numbers show that it has the capacity to turn around. I could wait a little while longer to see if it stays profitable now. But the more I observe it, the more convinced I get that it is a stock that could rise over time. It is a buy for me. 

Jobs giant

A buoyant jobs market makes Staffline Group (LSE: STAF) a great buy in my book. This business helps companies recruit and train workers, and it has performed splendidly as the UK economy has bounced back. Revenues jumped almost 5% in the six months to June.

Latest research suggests demand for workers will continue growing, too. According to Hays, some 80% of British employers plans to take on more staff over the next 12 months. Hays’s research also underlined the worsening skills shortage affecting domestic firms. A whopping 86% of companies have experienced skills shortages in the past year, the data shows.

This could also give an extra boost to Staffline Group. Its PeoplePlus division provides services like skills training and apprenticeships. Sales growth across the business could cool if the UK economy keeps struggling, but data such as that just released from Hays makes me reasonably confident recruiters like this could continue to thrive.

Another excellent penny stock

I already have exposure to the construction materials provider CRH. And I’m thinking of buying more of the FTSE 100 stock following its recent share price weakness. However, I believe another good idea could be to buy Breedon Group (LSE: BREE).

This UK share owns and operates several cement plants, ready-mix concrete plants, asphalt plants and quarries. It’s therefore in great shape to make bucketloads of cash (at least in my opinion) as British housebuilding activity increases and infrastructure spending ramps up several notches.

Breedon Group could suffer setbacks, of course, if a shortage of truck drivers persists. Strong demand for its products counts for little if the company can’t get them to its customers. That said, I’d still buy this UK share as its earnings outlook for the longer term looks mightily attractive.

Making money with green energy

If my concerns over UK economic conditions grow, however, I might be tempted to buy Greencoat Renewables (LSE: GRP). As the name suggests, this penny stock operates in the field of renewable energy. More specifically it operates a raft of windfarms across Ireland and mainland Europe.

As energy demand remains broadly stable at all points in the economic cycle, this UK share can expect revenues to keep rolling in during good times and bad. I also like Greencoat Renewables because it’s a great way to make money from the ‘green revolution’ of the 2020s. I’m a fan of its commitment to geographic expansion too (last week it acquired its first assets in Sweden).

It’s important to remember that creating energy from renewable sources can be problematic. The wind isn’t always guaranteed to blow, and this can take a big bite out of the turbine operator’s earnings. Still, I think the risk-to-reward outlook for Greencoat Renewables remains highly attractive. I’d happily add it to my own shares portfolio in November.