Investment case against Sthree

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25th Nov '20 by WelshMat

4 comments 688 reads

I'm currently looking into Sthree and I've been going over their reports and whilst COVID has no doubt had some impact on the business in a number of ways I'm liking what I've seen so far. It doesn't seem without risk there seems to be potential upside. I was wondering if anyone else had looked into this company and decided against it and what your reasons were for passing up on it?

For me the biggest downsides for the business seem to be the fall out from a no-deal Brexit and the employment landscape in a Covoid and now hopefully post Covid world in late 2021 or in 2022.

Any thoughts would be most appreciated.

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About the Author

WelshMat

Premium Member

Professional computer games developer. Obsessive board games purchaser and occasional player. Interested in current affairs and Political, Military and Economic history.

4 comments

GloucesterBob

25th Nov '20

I initially bought this share 20 days ago, and twice since, after it had been on the Jim Slater screen for a couple of months and with added criteria of high StockRank and positive Stockrank style.

Though the two subsequent buys were at a higher price, I am around 10% up in a relatively short time.

What actually made me hit the buy button was a write up Paul did in the SCVR report about a staffing company (not £STEM) where he said they tend to be the first into a recession and first out.

Graham some time ago said SThree (LON:STEM) was probably the best staffing company out there.

Not sure Brexit will have much effect, as SThree (LON:STEM) has offices around the world including Europe (3,100 employees).

Sorry cannot help convince you to not buy this share

WelshMat

25th Nov '20

No don't worry if you can't find a reason not to buy I was just looking to see if there was a major downside I was missing. But so far what you said seems to tally with what I've read. The only minor issue is the change of CEO in 2019, means he's got a bit of a baptism of fire, but I don't think any length of tenure could prepare you for 2020.

I mentioned Brexit as a possible downside as its been brought up in some of their final reports, but it did feel like that was mitigated by most of their business coming from the EU and the US, plus with them having physical presences in those territories the costs of selling services cross borders should be mitigated (at least that's how I understand selling services, but I could be wrong).

Covid feels like an issue that will hopefully be at least partially under control next year, but the IT industry (which I work in) hasn't really stopped hiring, we're onboarding people who have yet to set foot on our campus.

Thanks very much for the additional info and the speedy and helpful response.

LeicesterPete

4th Dec '20

Thanks for posting thoughts as I’ve now taken an initial position today. I too spotted this on the Jim Slater screen and I think this could be an excellent recovery play. I did have Hays on my list but SThree scores much better and comes out on top in stockos comparison tool. For what it is worth my brother in law is in recruitment in London and he spoke highly of this company, so a good reputation in his view at least. Only downside was the current ceo doesn’t have a very big holding if I’ve read the annual report correctly.

Matthew Wood

7th Dec '20

I purchased STEM on 11/11/20 (277p), mainly as a recovery play on a UK stock as I wanted to allocate more capital in that area. Fundamentals are strong. There was a clear bottom formed at 200p so this meant downside was limited. They also specialise in industries which aren't heavily caught in the lockdown mire which is helpful.

I have a few friends in recruitment (admittedly mainly in Financial Services but one in Tech) and things are starting to pickup. Many companies will have frozen hires but mainly this is due to uncertainty and also the fact that projects/investments were being put on hold - I think the vaccine news will mean the wheels will start again.

STEM had a spike just recently (332p) but has had a pullback to c300p - I'd argue that this is the last opportunity before it moves up again. I will look to sell at around 380p as there is some real historical resistance c400p - but that's still another 25-30% potential headroom.

Best of luck.

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Investment case against Sthree

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About the Author

WelshMat

4 comments

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