My investment mantra has always been to buy and hold for a long time period. So despite current economic issues and headwinds, one penny stock I am planning on adding to my holdings is Marston’s (LSE:MARS). Here’s why.
Pubs and bars
Marston’s is an owner and operator of pubs and bars, as well as an ale brewer with over 180 years of experience. It has a workforce of over 14,000 people and is a powerhouse in the leisure sector with more than 1,500 locations. It also operates six breweries that produce over 60 different ales.
So what’s the current state of play with Marston’s share price? Well, as I write, the shares are trading for 35p, putting them in the penny stock category. At this time last year, the stock was trading for 83p, which is a 57% decline over a 12-month period. I’m not concerned by the current share price drop, caused by macroeconomic headwinds. In fact, I view this as an opportunity to buy cheaper shares.
Challenges to note
There are a few current macroeconomic headwinds at play such as soaring inflation, rising costs, the energy crisis, and the supply chain crisis. Marston’s shares have fallen and the business could suffer further yet. For example, rising costs eat into profit margins. Next, the energy crisis here in the UK is causing many businesses to crumble under pressure from higher energy costs.
Finally, due to these factors, a cost-of-living crisis has emerged in the UK. Marston’s could see its customer numbers fall as people have less money to spend on going out.
Why I like Marston’s shares
So let’s take a look at the bull case then. To start with, I believe the risks mentioned earlier are shorter term. My belief is that a business like Marston’s, with its diversified offering, brand power, and large presence in the UK should be able to boost growth, performance, and shares in the longer term.
Despite Marston’s performance falling since the pandemic, which was a really tough period for all in the leisure industry, it still manages to record a consistent profit. I believe it can return to pre-pandemic levels eventually based on previous track record, as well as my points earlier around brand power and size.
One final positive aspect I believe that could boost Marston’s in the longer term is pent-up demand. The pandemic gave many people a new-found appreciation for socialising, and attending their favourite restaurants and bars. When restrictions originally eased last year, pent-up demand boosted many businesses, Marston’s included. This resurgent attitude towards socialising should continue to boost Marston’s, in my opinion.
My verdict
In conclusion, I expect Marston’s shares to experience some tough times ahead, more so in the shorter term. Despite that, they look like a cheap penny stock option for me to buy and hold for the long term with a diversified business model, a great presence, and brand power. I’ll be buying the shares imminently.
