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In what’s become a very familiar story, Rolls-Royce shares continue to help power the FTSE 100 skywards this year. But while the engineer is up 70% since 1 January, some top UK penny stocks have delivered even better returns so far in 2025.
Take Staffline (LSE:STAF), for instance, which has more than doubled in value. Total price gains are 107% since the turn of the year.
Here’s why I think the recruiter is a top small-cap share to consider today.
Strong results
In the context of a weakening domestic labour market, Staffline’s performance has been remarkable. The business — which supplies around 35,000 blue collar staff in the UK, and 4,500 in Ireland — said in May that it continued to enjoy “strong momentum” in the first four months of the year following a robust 2024.
Gross profit was up 6.2% in the period, it said, driven by robust demand for temporary and agency staff. With job vacancies across Britain having fallen every month since mid-2022, that’s no mean feat.
This strength reflects in part Staffline’s great relationships with blue-chip clients in defensive sectors, like Tesco, Sainsbury’s, Bunzl, and Pepsico. In May, Staffline also announced a three-year contract with a “leading food and drink logistics provider” that it said “materially” improves its outlook for the period.
Cheap as chips
Perhaps unsurprisingly, this news alone gave Staffline’s share price an extra dose of jet fuel.
Yet, despite this year’s price gains, the employment specialist’s shares still offer excellent value for money today, at 48p. Earnings are expected to rise 17% in 2025, leaving Staffline trading on a sub-1 price-to-earnings-to-growth (PEG) ratio of 0.7.
This cheapness perhaps reflects the broader state of the UK economy and the threats it poses to recruiters. In the case of Staffline, it’s important to note its large exposure to more cyclical sectors like manufacturing and sales, and what this could mean for short-term profits.
Businesses in this sector also face challenges following changes in last October’s Budget. A rise in both the National Living Wage and employers’ National Insurance contributions could crimp margins and impact demand from its clients.
A top growth share
Encouragingly, however, City analysts expect Staffline’s profits to continue growing at breakneck speed. City brokers are expecting earnings to rise another 51% in 2026, pulling the firm’s corresponding PEG ratio even lower, to 0.2.
It also means the penny stock’s price-to-earnings (P/E) ratio of 12.8 times for 2025 falls to a bargain-basement 8.5 times for next year. While Staffline shares are perhaps high-risk in the current environment, these low valuations provide a margin of safety.
It’s also good to see the business still strengthening its balance sheet, giving it more breathing room to weather an industry downturn. The sale of its underperforming PeoplePlus unit in February gives Staffline — which swung back to a net cash position in 2024 — an extra £6.9m boost.
For investors seeking top penny stocks, I think it’s worth a serious look.
