MIDAS SHARE TIPS UPDATE: Recruitment group Staffline soars by 288% as it targets a turnover of £1bn

By JOANNE HART, FINANCIAL MAIL ON SUNDAY

Updated: 03:57 EDT, 9 June 2014

When blue-collar recruitment firm Staffline Group floated on the stock market in 2004, the firm vowed to triple in size in three years. By 2007, it had tripled revenues and quadrupled profits.

The recession did little for growth but in 2009, in an attempt to galvanise the troops, chief executive Andy Hogarth came up with the slogan ‘treble the treble’ – a target that was hit in 2012.

Now the aim is to ‘burst the billion’, taking revenues to more than £1billion by 2017 and profits to about £40million. The catchy phrases might sound corny, but they seem to be working.

Fruitful: Staffline has started supplying agricultural workers

Not only has Staffline gone from strength to strength, but the shares have soared as well. In November 2012, when Midas recommended them, the price was 2391⁄2p. Today it is 930p. Even at this level, there is further long-term potential.

The company bought welfare-to-work business Avanta Enterprise last month and is branching into new areas, such as agriculture and transport.

Analysts now expect profits to rise from last year’s £12.5million to £18.4million in 2014 and £22million next year. The dividend is likely to go up by at least 25 per cent to 12.5p for 2014 and to about 14.5p the following year.

Staffline has traditionally focused on providing staff for factories, distribution centres and food processing plants. More than half the group’s turnover comes from supplying supermarkets and food makers.

About 52 per cent of supermarket sales come from special offers, so demand fluctuates considerably and Staffline ensures properly trained workers are at hand.

The firm recently started supplying agricultural workers too, in areas such as strawberry picking and freerange chicken processing. And lorry drivers are expected to fuel growth, following a new law forcing all heavy goods vehicle drivers to pass a Certificate of Professional Competence.

This is likely to result in a scarcity of qualified drivers and Staffline hopes to fill the gap. The company has also become the third-largest welfare-to-work provider, following the acquisition of Avanta.

The Government’s scheme to get the unemployed into work has been the subject of much criticism, but it has been quietly improving, a number of important contracts are coming up in 2016 and Hogarth aims to be well positioned to grab them.

Midas verdict: Those who bought Staffline shares in 2012 have been rewarded well and might well be tempted to sell 30 per cent to bank some profit. But they should keep the rest as Hogarth is an excellent boss, who has consistently delivered growth. New investors may be concerned by Staffline’s meteoric rise, but the stock should still prove rewarding over the next five years.