Undiscovered Gems in Australia for August 2024

The Australian market has shown mixed performance recently, with the ASX200 breaking its winning streak and closing slightly down by 0.04% at 8,024 points. Sectors such as Telecommunication and Health Care saw modest gains while Utilities and Energy experienced declines, reflecting a balanced yet cautious market sentiment. In this environment of fluctuating sector performances, identifying promising small-cap stocks requires careful consideration of their growth potential and resilience. Here are three undiscovered gems in Australia that stand out for August 2024.

Top 10 Undiscovered Gems With Strong Fundamentals In Australia

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Fiducian Group	NA	9.94%	6.48%	★★★★★★
Lycopodium	NA	17.22%	33.85%	★★★★★★
Schaffer	24.98%	2.97%	-6.23%	★★★★★★
Sugar Terminals	NA	2.34%	2.64%	★★★★★★
Plato Income Maximiser	NA	11.43%	14.26%	★★★★★★
SKS Technologies Group	NA	34.68%	47.39%	★★★★★★
Hearts and Minds Investments	NA	18.39%	-3.93%	★★★★★★
AMCIL	NA	5.16%	5.31%	★★★★★☆
A2B Australia	15.83%	-7.78%	25.44%	★★★★☆☆
Boart Longyear Group	71.20%	9.71%	39.19%	★★★★☆☆

Click here to see the full list of 52 stocks from our ASX Undiscovered Gems With Strong Fundamentals screener.

Let's explore several standout options from the results in the screener.

DroneShield (ASX:DRO)

Simply Wall St Value Rating: ★★★★★★

Overview: DroneShield Limited develops, commercializes, and sells hardware and software technology for drone detection and security in Australia and the United States, with a market cap of A$1.08 billion.

Operations: Revenue for DroneShield Limited primarily comes from its Aerospace & Defense segment, totaling A$55.08 million.

DroneShield, an emerging player in the aerospace and defense sector, has recently turned profitable. The company completed a follow-on equity offering of A$120 million at A$1.15 per share, which seems to have diluted shareholders over the past year. Despite this, DroneShield remains debt-free and boasts high-quality earnings. Forecasts indicate a robust annual earnings growth rate of 40.21%, positioning it for significant future expansion in its industry segment.

• Navigate through the intricacies of DroneShield with our comprehensive health report here.

• Gain insights into DroneShield's historical performance by reviewing our past performance report.

Emerald Resources (ASX:EMR)

Simply Wall St Value Rating: ★★★★★☆

Overview: Emerald Resources NL focuses on the exploration and development of mineral reserves in Cambodia and Australia, with a market cap of A$2.64 billion.

Operations: Emerald Resources NL generates revenue primarily from mine operations, amounting to A$339.32 million.

Emerald Resources, a small cap in the mining sector, has seen its debt to equity ratio rise from 0% to 14.5% over five years. Despite this, it holds more cash than total debt and covers interest payments 14 times over with EBIT. Earnings grew by 53.4% last year, outpacing the industry’s -12.7%, and are forecasted to grow another 20.14%. Trading at A$0.57 per share, it's currently valued at 56.6% below fair value estimates.

• Click here and access our complete health analysis report to understand the dynamics of Emerald Resources.

• Review our historical performance report to gain insights into Emerald Resources''s past performance.

Servcorp (ASX:SRV)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Servcorp Limited offers executive serviced and virtual offices, coworking spaces, as well as IT, communications, and secretarial services, with a market cap of A$477.34 million.

Operations: Servcorp Limited generates revenue primarily from real estate rentals, amounting to A$314.89 million. The company's net profit margin stands at 10%.

Servcorp, a small cap player in the real estate sector, has shown impressive growth with earnings surging 252.7% over the past year, outpacing the industry’s 28%. Trading at 13.6% below its estimated fair value, it offers good relative value compared to peers. Recent results highlighted sales of A$314.11 million and net income of A$39.04 million for FY24. The company declared a final dividend of 13 cents per share, up from last year's 12 cents per share.

• Get an in-depth perspective on Servcorp's performance by reading our health report here.

• Assess Servcorp's past performance with our detailed historical performance reports.

Key Takeaways

• Take a closer look at our ASX Undiscovered Gems With Strong Fundamentals list of 52 companies by clicking here.
• Shareholder in one or more of these companies? Ensure you're never caught off-guard by adding your portfolio in Simply Wall St for timely alerts on significant stock developments.
• Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent.

Ready For A Different Approach?

• 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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