Discover Australia's Top 3 Undervalued Small Caps With Insider Activity In August 2024

As the ASX200 climbed 1.3% to close above 7970 points, driven by Wall Street's ongoing rally and strong performances in the Energy and Materials sectors, investors are increasingly looking for opportunities in undervalued small-cap stocks. In this dynamic market environment, identifying small caps with notable insider activity can provide valuable insights into potentially promising investments.

Top 10 Undervalued Small Caps With Insider Buying In Australia

Name	PE	PS	Discount to Fair Value	Value Rating
Healius	NA	0.6x	45.02%	★★★★★☆
Elders	22.7x	0.5x	49.48%	★★★★☆☆
Eagers Automotive	9.8x	0.3x	39.94%	★★★★☆☆
Neuren Pharmaceuticals	12.7x	8.6x	-50.28%	★★★★☆☆
Coventry Group	296.7x	0.4x	0.13%	★★★★☆☆
RAM Essential Services Property Fund	NA	6.0x	43.50%	★★★★☆☆
Dicker Data	22.5x	0.8x	8.83%	★★★☆☆☆
Codan	30.7x	4.5x	31.45%	★★★☆☆☆
Kelsian Group	47.1x	0.8x	27.96%	★★★☆☆☆
FINEOS Corporation Holdings	NA	2.5x	-746.32%	★★★☆☆☆

Click here to see the full list of 14 stocks from our Undervalued ASX Small Caps With Insider Buying screener.

Let's dive into some prime choices out of from the screener.

Eagers Automotive (ASX:APE)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Eagers Automotive operates as a major car retailer in Australia with a market cap of A$3.50 billion.

Operations: Car Retailing contributes the majority of revenue at A$9.85 billion. The net income margin has seen fluctuations, reaching a peak of 3.75% in December 2021 before declining to 2.85% by December 2023. Operating expenses have consistently been a significant portion of costs, with General & Administrative Expenses alone accounting for over A$700 million in recent periods.

PE: 9.8x

Eagers Automotive, a small cap stock in Australia, has recently announced a share repurchase program to buy back up to 25.8 million shares by June 2025, indicating insider confidence. They are actively seeking M&A opportunities as part of their Next100 Strategy and expect revenue growth of 5.52% annually despite projected earnings decline by 0.7% per year over the next three years. This positions Eagers as an intriguing prospect for investors looking at undervalued stocks with potential growth catalysts in place.

• Delve into the full analysis valuation report here for a deeper understanding of Eagers Automotive.

• Understand Eagers Automotive's track record by examining our Past report.

Codan (ASX:CDA)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Codan is an Australian company specializing in the development and manufacturing of communications equipment and metal detection products, with a market cap of A$1.16 billion.

Operations: Codan generates revenue primarily from its Communications and Metal Detection segments, with the former contributing A$291.50 million and the latter A$212.20 million. The company's gross profit margin has shown a trend of slight fluctuations, reaching 54.42% as of December 2023. Operating expenses include significant allocations to Sales & Marketing and R&D, amounting to A$97.79 million and A$33.31 million, respectively, in the same period.

PE: 30.7x

Codan, a small Australian tech firm, has recently caught attention for its potential undervaluation. The company is expected to report its Fiscal Year 2024 results on August 16, 2024. Notably, insiders have shown confidence through share purchases over the past year. Codan's earnings are projected to grow at 16% annually, highlighting promising prospects despite relying solely on external borrowing for funding. This growth trajectory positions Codan as an intriguing option in the small-cap space in Australia.

• Unlock comprehensive insights into our analysis of Codan stock in this valuation report.

• Learn about Codan's historical performance.

NRW Holdings (ASX:NWH)

Simply Wall St Value Rating: ★★★★☆☆

Overview: NRW Holdings is an Australian company specializing in civil construction, mining services, and urban infrastructure with a market cap of A$1.28 billion.

Operations: NRW Holdings generates revenue primarily from its Mining, MET, and Civil segments. For the period ending 2024-06-30, the company reported a gross profit margin of 47.99%. Operating expenses include significant allocations for general and administrative costs as well as depreciation and amortization. Net income margin for the same period stands at 3.60%.

PE: 15.4x

NRW Holdings appears undervalued within Australia's smaller companies, with a recent dividend increase to A$0.09 per share for the six months ending June 30, 2024. The company reaffirmed its revenue guidance of A$2.9 billion for fiscal year 2024 and completed a follow-on equity offering worth A$5.26 million in July 2024. Insider confidence is evident from recent share purchases, suggesting optimism about future growth prospects amidst forecasted earnings growth of 9.63% annually despite higher-risk funding sources.

• Get an in-depth perspective on NRW Holdings' performance by reading our valuation report here.

• Gain insights into NRW Holdings' historical performance by reviewing our past performance report.

Turning Ideas Into Actions

• Explore the 14 names from our Undervalued ASX Small Caps With Insider Buying screener here.
• Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.
• Invest smarter with the free Simply Wall St app providing detailed insights into every stock market around the globe.

Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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