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I’m thinking I might use some of my new Stocks and Shares ISA contribution limit for penny shares. These ultra-affordable stocks are typically priced at less than £1 with the companies valued at under £100m.
Lower prices tend to lead to bigger spreads between buying and selling prices. And that can mean we need a bigger rise to break even. And I try to keep away from companies that are too small, as they so often seem able to go bust in the blink of an eye.
Back to growth?
I took my eye off Staffline (LSE: STAF) and missed a year-to-date gain of 40%+ so far in 2025. A trading update on 4 February revealed a 12.8% rise in full-year revenue, with underlying operating profit up 7.8% to £11.1m.
In what might be key to recovery, the recruitment and training company reported net cash of £3.3m at 31 December, compared to £0.7m of debt a year previously.
The big share price jump came from a disposal announcement on 25 February. The company sold its PeoplePlus subsidiary for £12m in cash (including £2m in deferred consideration). It’s subject to “a deduction of £5.1m of advanced payments received in respect of future revenue”. But the whole deal is expected to add another £6.9m to Staffline’s cash pile.
The main risk I see is that analysts still expect a loss per share for 2024. And the profit they’ve pencilled in for 2025 would mean a price-to-earnings (P/E) ratio of 11. That doesn’t leave a lot for safety. But it might just mark the start of sustained growth.
Full-year results are due on 8 April, and I’ll be watching.
Ready to take off?
I keep coming back to Helium One Global (LSE: HE1) and thinking it could be huge success. Or that it could be a spectacular fail.
It depends mainly on the company’s helium project in Tanzania, with that rare gas being short in supply and high in demand.
So far, the company has a mining licence offer, but there’s further approvals process still to come. It’s been slow progress, and the shares have crashed heavily from the high peaks of 2021.
That often happens with a new start-up that isn’t in profit yet. I often expect to see an early boom and bust before I risk any cash. And if first profits really are finally coming into view, I reckon there could be solid potential here.
But over the past few years, Helium One’s been issuing more and more shares to raise the cash it needs. The share count’s mushroomed 12-fold. And if it needs more money, existing shareholders could be diluted even more.
It’s good to see institutional investors including aberdeen and Barclays owning around half the company. But with the market-cap at £64m, it’s relatively small beer for them.
I’m really on the fence with this one, but it’s on the list.
