Covid-19 business disruptions have caused the UK share prices of many FTSE 250 companies to plummet. Unfortunately, they’ve also led to a very rapid rise in unemployment in early 2020. In fact, UK job vacancies in April last year reached their lowest point in over two decades.
However, the most recent figures from the Office of National Statistics has revealed an encouraging trend. The average number of jobs openings in the UK alone has shot up by 68% over the past six months, increasing from 304,000 in April 2020 to 512,000 today.
Seeing employment levels begin to return is undoubtedly good news for the economy in general. But it is excellent news for one FTSE 250 stock in particular in my opinion.
A global leader in talent recruitment
PageGroup (LSE:PAGE) is an international recruitment specialist. The business is focused on providing qualified individuals to fulfil specific jobs across a wide range of industries. After 40 years of being in business, the stock’s brand has become well known within the job recruitment space, with many customers increasing their reliance on its services each year.
Over the years, the company has developed a deep pool of talent to provide for its customers. Many recruitment agencies can provide general staffing quickly. But PageGroup has expanded its reach to ensure that it can offer talented individuals to fulfil roles within a business at any level. From low-level clerical workers all the way to top-tier executives.
Risks to consider
A critical part of PageGroup’s success is its strong reputation for finding the right people for the right job. This has made the shares in this UK business a popular choice amongst talent acquisition teams at companies. But it also has created a certain level of expectation that places additional pressure on the business.
Suppose the firm cannot find or provide qualified individuals to fulfil new roles. Or even worse, it gives an individual that is not capable of meeting customer expectations. In that case, its customers will turn to competitors to acquire the talent they need. This ultimately enables PageGroup’s rivals to begin developing relationships with its own customers, leading to potential revenue loss in the future. This is a risk that will always threaten the stock, I feel.
Another risk to consider is the stock’s international operations. The majority of the firm’s operating profit is generated outside the UK. Consequently, it is exposed to foreign exchange rate risks that can substantially impact the overall performance of the business.
Should I buy the FTSE 250 stock?
In my opinion, as the UK job market begins to return, PageGroup looks like a fantastic way to profit from the rising trends. Especially since the boost in business will likely result in the return of its historical 3% dividend yield.
But the talent recruitment market is highly competitive. While its reputation grants it some competitive advantages, they don’t seem substantial enough to me. Therefore I won’t be adding these UK shares into my portfolio. But I will definitely be keeping an eye on it.
