One penny stock that caught my eye recently is Ten Lifestyle Group (LSE: TENG). Here’s why.
Lifestyle and concierge services for the wealthy
As an introduction, Ten Lifestyle is a technology-enabled lifestyle and travel business providing a number of services for wealthy and high net worth individuals. These services include travel and concierge, dining, entertainment, and events.
It is worth remembering that a penny stock is one that trades for less than £1. So what’s happening with Ten Lifestyle’s shares currently? As I write, they’re trading for 87p. At this time last year, they were trading for 53p, which is a 64% increase over a 12-month period.
Ten Lifestyle’s performance is impressive considering many other larger established markets such as the FTSE 100 and FTSE 250 have struggled in recent months due to soaring inflation and rising interest rates.
The investment case
Starting with the bull case, Ten Lifestyle’s mantra is to cater to the wealthy and affluent people of the world. Generally speaking, despite economic volatility, the wealthy are largely unaffected and go about their day to day life spending as usual. I believe Ten Lifestyle is in an excellent position to capitalise on this.
Moving on, I believe Ten’s most recent update, a half-year report released in May covering the six months to February, supports my first point above. Net revenues climbed nearly 50% compared to the same period previously. In addition to this, it managed to service 43% more clients, which meant the number of clients on its books totalled a record 275,000.
Finally, I’m buoyed by Ten Lifestyle’s appetite for growth. It recognises that the number of high net worth people is on an upwards trajectory. With that in mind, it is spending heavily on technology and telecommunications to keep up with the times and enhance its offering. This can be seen in the £7.1m it spent in the six months to February 2023 alone on such infrastructure.
A penny stock I would buy
Despite trading as a penny stock, Ten Lifestyle’s valuation could be considered a bit high at present. It currently trades on a price-to-earnings ratio of just over 30. Any setbacks in performance could potentially lead to a share price fall.
Another thing to be wary of is that Ten Lifestyle’s business suffered badly during the pandemic. Although trading levels have returned to normal, I’m conscious that any similar type of event, where travel and such services aren’t possible, could dampen Ten Lifestyle’s performance.
Overall, I like the look of Ten Lifestyle as a penny stock for my holdings. I would be willing to add some shares when I have the cash to do so.
I believe Ten Lifestyle has great growth prospects ahead, and has performed well recently, which has helped me make my decision. Trading for less than 90p, I see very little risk, and potentially high reward in the future.
