Undervalued Small Caps In Australia With Insider Action For August 2024

The Australian market has climbed 2.0% in the last 7 days and is up 6.4% over the last 12 months, with earnings expected to grow by 13% per annum over the next few years. In this favorable environment, identifying undervalued small-cap stocks with notable insider activity can present compelling investment opportunities.

Top 10 Undervalued Small Caps With Insider Buying In Australia

Name	PE	PS	Discount to Fair Value	Value Rating
Healius	NA	0.6x	47.07%	★★★★★☆
Elders	22.6x	0.5x	49.87%	★★★★☆☆
Eagers Automotive	9.6x	0.3x	41.11%	★★★★☆☆
Codan	30.1x	4.4x	33.11%	★★★★☆☆
Neuren Pharmaceuticals	12.7x	8.6x	-14.84%	★★★★☆☆
Coventry Group	291.5x	0.4x	1.59%	★★★★☆☆
RAM Essential Services Property Fund	NA	6.0x	43.93%	★★★★☆☆
Dicker Data	22.8x	0.8x	8.04%	★★★☆☆☆
Deterra Royalties	11.6x	7.7x	14.06%	★★★☆☆☆
Kelsian Group	46.0x	0.8x	29.44%	★★★☆☆☆

Click here to see the full list of 13 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 is a leading Australian automotive retail group specializing in car retailing and property management with a market cap of A$3.50 billion.

Operations: Car Retailing generates the majority of revenue, reaching A$9.85 billion. Gross profit margin has shown fluctuations, peaking at 19.13% in June 2022 and most recently recorded at 18.60% in December 2023. Operating expenses are significant, with General & Administrative Expense being a major component, amounting to A$730.16 million by December 2023.

PE: 9.6x

Eagers Automotive, a player in the Australian market, is making strategic moves to bolster its position. The company recently announced a share repurchase program on June 11, 2024, aiming to buy back up to 25.8 million shares by June 30, 2025. Despite high debt levels and reliance on external borrowing for funding, Eagers is actively seeking acquisitions and investments as part of its Next100 Strategy. Revenue is forecasted to grow by 5.52% annually; however, earnings are expected to decline slightly by an average of 0.7% per year over the next three years

• Click here and access our complete valuation analysis report to understand the dynamics of Eagers Automotive.

• Learn about Eagers Automotive's historical performance.

Codan (ASX:CDA)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Codan is a company specializing in metal detection and communications technology, with a market cap of approximately A$1.40 billion.

Operations: Codan's revenue streams are primarily derived from Communications (A$291.50 million) and Metal Detection (A$212.20 million). The company's gross profit margin has shown a downward trend, moving from 0.56473% in June 2020 to 0.54424% in December 2023, indicating increasing cost pressures or changes in pricing strategy over this period.

PE: 30.1x

Codan, a small cap in Australia, has shown insider confidence with key personnel purchasing shares over the past six months. The company is forecast to grow earnings by 16.2% annually. Despite relying entirely on external borrowing for funding, which poses higher risk, Codan remains attractive due to its growth prospects and insider activity. With no customer deposits reported, the financial structure warrants careful consideration for potential investors seeking undervalued opportunities in this sector.

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

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

Dicker Data (ASX:DDR)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Dicker Data is a wholesale distributor specializing in computer peripherals with a market cap of A$1.78 billion.

Operations: The company generates revenue primarily from wholesale computer peripherals, with recent figures showing A$2.27 billion in revenue. The cost of goods sold (COGS) is significant, amounting to A$1.94 billion, leading to a gross profit of A$322.61 million and a gross profit margin of 14.23%. Operating expenses are recorded at A$186.77 million, and the net income stands at A$82.15 million with a net income margin of 3.62%.

PE: 22.8x

Dicker Data, a small-cap Australian company, has shown promising signs of being undervalued. Recent insider confidence is evident, with key personnel purchasing shares in the last six months. Despite having a high level of debt and relying solely on external borrowing for funding, the company's earnings are forecasted to grow at 7.83% annually. This growth potential combined with insider buying suggests that insiders believe in the company's future prospects and stability within its industry context.

• Take a closer look at Dicker Data's potential here in our valuation report.

• Gain insights into Dicker Data's past trends and performance with our Past report.

Summing It All Up

• Take a closer look at our Undervalued ASX Small Caps With Insider Buying list of 13 companies by clicking here.
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Ready To Venture Into Other Investment Styles?

• 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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