Middle East's Undiscovered Gems Three Promising Small Cap Stocks

As Gulf markets experience gains amid easing US-China trade tensions, investor optimism is on the rise, with indices such as Saudi Arabia's benchmark index and Dubai's main share index seeing positive movements. In this environment of shifting market sentiment, identifying small-cap stocks that demonstrate resilience and growth potential can be key to uncovering promising investment opportunities in the Middle East.

Top 10 Undiscovered Gems With Strong Fundamentals In The Middle East

Click here to see the full list of 210 stocks from our Middle Eastern Undiscovered Gems With Strong Fundamentals screener.

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

Saudi Azm for Communication and Information Technology (SASE:7211)

Simply Wall St Value Rating: ★★★★★★

Overview: Saudi Azm for Communication and Information Technology Company, with a market cap of SAR 1.48 billion, offers business and digital technology solutions in the Kingdom of Saudi Arabia through its subsidiaries.

Operations: Saudi Azm generates revenue primarily from four segments: Advisory (SAR 32.34 million), Enterprise Services (SAR 139.54 million), Proprietary Technologies (SAR 50.19 million), and Platforms for Third Parties (SAR 31.08 million).

Saudi Azm for Communication and Information Technology, with its nimble market position, showcases impressive financial health. Over the past five years, its debt-to-equity ratio impressively decreased from 57.9% to 3.5%, signaling disciplined financial management. The company reported SAR 69.96 million in sales and SAR 13.45 million in net income for the first quarter ending September 2025, highlighting strong operational performance alongside a basic earnings per share of SAR 0.24 from continuing operations. Notably trading at a significant discount to estimated fair value by about 72%, Saudi Azm's earnings growth of 34% outpaces the IT industry's average of 8%.

• Delve into the full analysis health report here for a deeper understanding of Saudi Azm for Communication and Information Technology.

• Examine Saudi Azm for Communication and Information Technology's past performance report to understand how it has performed in the past.

Cohen Development Gas & Oil (TASE:CDEV)

Simply Wall St Value Rating: ★★★★★★

Overview: Cohen Development Gas & Oil Ltd. is involved in the exploration, development, production, and marketing of natural gas, condensate, and oil across Israel, Cyprus, and Morocco with a market cap of ₪1.30 billion.

Operations: Cohen Development Gas & Oil generates revenue primarily from the production and management of oil and gas exploration, amounting to $27.91 million.

Cohen Development Gas & Oil, a smaller player in the energy sector, has demonstrated impressive financial health with no debt over the past five years. Its earnings growth of 66.1% last year outpaced the oil and gas industry average of 0.3%, highlighting its robust performance. The company reported a notable increase in net income for Q2 2025 at US$11.15 million, compared to US$4.7 million a year prior, with basic earnings per share rising to US$1.73 from US$0.73 previously. With a price-to-earnings ratio of 12.8x below the IL market average of 16x, it seems attractively valued relative to peers.

• Click to explore a detailed breakdown of our findings in Cohen Development Gas & Oil's health report.

• Evaluate Cohen Development Gas & Oil's historical performance by accessing our past performance report.

Telsys (TASE:TLSY)

Simply Wall St Value Rating: ★★★★★★

Overview: Telsys Ltd. is a company that markets and distributes electronic components in Israel, with a market cap of ₪1.73 billion.

Operations: Telsys generates revenue primarily from the SOM Sector and Distribution, with revenues of ₪277.49 million and ₪143.68 million, respectively. The net profit margin is a key metric to consider when evaluating its financial performance.

Telsys has been making waves with its consistent performance over the past five years, achieving an impressive 25.5% annual earnings growth despite trailing behind the electronic industry's recent pace. The company's debt-to-equity ratio improved from 13.4% to 8%, showcasing prudent financial management, while its price-to-earnings ratio of 15.5x remains attractive compared to the IL market's average of 16x. Recent earnings reports highlight a robust increase in sales to ILS 111.95 million and net income reaching ILS 32.63 million for Q2, reflecting a solid foundation for future growth amid competitive industry dynamics.

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

• Assess Telsys' past performance with our detailed historical performance reports.

Turning Ideas Into Actions

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Interested In Other Possibilities?

• 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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