Three Undiscovered Gems In Australia With Promising Potential

The Australian market has remained flat over the last week but is up 18% over the past year, with earnings forecasted to grow by 12% annually. In this environment, identifying stocks with strong fundamentals and growth potential can be key to uncovering promising opportunities.

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%	★★★★★★
Bisalloy Steel Group	0.95%	10.27%	24.14%	★★★★★★
Sugar Terminals	NA	3.14%	3.53%	★★★★★★
Lycopodium	NA	17.22%	33.85%	★★★★★★
Red Hill Minerals	NA	75.05%	36.74%	★★★★★★
Steamships Trading	33.60%	4.17%	3.90%	★★★★★☆
AMCIL	NA	5.16%	5.31%	★★★★★☆
Hearts and Minds Investments	1.00%	18.81%	20.95%	★★★★☆☆
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 57 stocks from our ASX Undiscovered Gems With Strong Fundamentals screener.

Underneath we present a selection of stocks filtered out by our screen.

Qualitas (ASX:QAL)

Simply Wall St Value Rating: ★★★★★☆

Overview: Qualitas is a real estate investment firm specializing in direct investments across various real estate classes and geographies, as well as acquisitions, restructuring of distressed debt, third-party capital raisings, and consulting services, with a market cap of approximately A$749.45 million.

Operations: Revenue for Qualitas primarily comes from direct lending, generating A$26.79 million, and funds management, contributing A$13.61 million.

Qualitas, a promising player in the Australian market, has shown notable financial improvements with its debt to equity ratio dropping from 931.3% to 79.6% over five years and maintaining a satisfactory net debt to equity ratio of 26.1%. Recent earnings have grown by 17.2%, outpacing the industry average of 16.4%. Despite interest coverage challenges, Qualitas remains on track with forecasted annual earnings growth of 22.44%, bolstered by high-quality past earnings and positive free cash flow projections.

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

• Explore historical data to track Qualitas' performance over time in our Past section.

Supply Network (ASX:SNL)

Simply Wall St Value Rating: ★★★★★★

Overview: Supply Network Limited operates in the aftermarket parts sector for the commercial vehicle industry across Australia and New Zealand, with a market cap of A$1.36 billion.

Operations: Supply Network Limited's revenue from providing aftermarket parts for the commercial vehicle market totals A$302.72 million. The company's financial performance is highlighted by a net profit margin trend worth noting.

Supply Network Limited, a promising player in the retail distribution sector, reported A$302.6 million in sales for the year ending June 2024, up from A$252.25 million previously. Net income also rose to A$33.03 million from A$27.41 million last year, reflecting strong earnings growth of 20.5%, which outpaced the industry average of 0.2%. The company has reduced its debt-to-equity ratio significantly over five years to 9.3%, with interest payments well-covered by EBIT at a multiple of 22.6x, signaling robust financial health despite recent insider selling and shareholder dilution concerns.

• Click to explore a detailed breakdown of our findings in Supply Network's health report.

• Review our historical performance report to gain insights into Supply Network's's past performance.

Tasmea (ASX:TEA)

Simply Wall St Value Rating: ★★★★★★

Overview: Tasmea Limited specializes in providing shutdown, maintenance, emergency breakdown, and capital upgrade services across various sectors in Australia, with a market capitalization of approximately A$519.87 million.

Operations: Tasmea's primary revenue streams include Mechanical Services and Electrical Services, generating A$141.42 million and A$129.44 million, respectively. The company also earns from Water & Fluid and Civil Services, contributing A$73.55 million and A$53.64 million to its revenue mix. Corporate Services add a smaller portion with A$1.94 million in revenue.

Tasmea's recent inclusion in the S&P/ASX Emerging Companies Index highlights its growing presence. Over the past year, earnings surged by 57%, outpacing industry growth of 16%. The company reported a net income of A$30.35 million for FY2024, up from A$19.32 million last year, with sales reaching A$400.01 million. Tasmea's debt management is commendable, reducing its debt to equity ratio from 168.5% to 44.4% over five years and maintaining it at a satisfactory level of 25%.

• Unlock comprehensive insights into our analysis of Tasmea stock in this health report.

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

Turning Ideas Into Actions

• Embark on your investment journey to our 57 ASX Undiscovered Gems With Strong Fundamentals selection here.
• Are you invested in these stocks already? Keep abreast of every twist and turn by setting up a portfolio with Simply Wall St, where we make it simple for investors like you to stay informed and proactive.
• 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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