Stock Analysis

Discover These 3 Undiscovered Gems To Enhance Your Portfolio

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As global markets navigate a complex landscape marked by rate cuts from the ECB and SNB, alongside expectations for a Federal Reserve cut, small-cap stocks have faced challenges with the Russell 2000 Index underperforming against larger peers. Amidst this backdrop of shifting economic indicators and market sentiment, discovering lesser-known stocks with strong fundamentals can be an effective strategy to enhance portfolio diversification.

Top 10 Undiscovered Gems With Strong Fundamentals

NameDebt To EquityRevenue GrowthEarnings GrowthHealth Rating
Nippon Denko20.08%5.07%47.43%★★★★★★
Lelon Electronics20.09%6.53%15.44%★★★★★★
Eagle Financial Services170.75%12.30%1.92%★★★★★★
Franklin Financial Services173.21%5.55%-1.86%★★★★★★
AzureWave TechnologiesNA3.00%29.49%★★★★★★
Ovostar Union0.01%10.19%49.85%★★★★★★
Tianyun International Holdings10.09%-5.59%-9.92%★★★★★★
Advancetek EnterpriseLtd56.32%41.67%65.57%★★★★★☆
Keli Motor Group21.66%9.99%-12.19%★★★★★☆
A2B Australia15.83%-7.78%25.44%★★★★☆☆

Click here to see the full list of 4626 stocks from our Undiscovered Gems With Strong Fundamentals screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Dongjin Semichem (KOSDAQ:A005290)

Simply Wall St Value Rating: ★★★★★★

Overview: Dongjin Semichem Co., Ltd. is a company that focuses on manufacturing and supplying electronic materials and foaming agents, with a market capitalization of ₩1.11 trillion.

Operations: Dongjin Semichem generates revenue primarily from its electronic materials segment, with ₩949.60 billion in South Korea and ₩478.00 billion overseas, alongside its foaming agents segment, which includes ₩93.80 billion in South Korea and ₩18.48 billion overseas. The company incurs intercompany transaction adjustments amounting to -₩187.69 billion.

Dongjin Semichem, a notable player in the chemicals sector, is trading at 71% below its estimated fair value, suggesting potential undervaluation. Over the past five years, earnings have grown at an impressive 17.1% annually, although recent growth of 9.5% lagged behind the industry average of 21%. The company's financial health appears solid with a net debt to equity ratio of 26.2%, deemed satisfactory by industry standards. Interest payments are well covered with EBIT covering them 11.6 times over, indicating robust profitability and efficient debt management practices that may appeal to investors seeking undervalued opportunities in this space.

KOSDAQ:A005290 Debt to Equity as at Dec 2024

Dalian Dalicap TechnologyLtd (SZSE:301566)

Simply Wall St Value Rating: ★★★★★☆

Overview: Dalian Dalicap Technology Co., Ltd. specializes in the research, development, manufacture, and sale of RF microwave ceramic capacitors both in China and internationally, with a market cap of CN¥8.05 billion.

Operations: Dalian Dalicap Technology Co., Ltd. generates revenue primarily from the sale of RF microwave ceramic capacitors. The company's financial performance is influenced by its cost structure, which includes manufacturing and development expenses.

Dalian Dalicap Technology, a notable player in the electronics sector, has shown resilience with earnings growth of 3.3% over the past year, outpacing the industry's 1.9%. The company's debt to equity ratio rose from 0% to 0.07% in five years, indicating an increase but still manageable levels. Recently reported sales for nine months ending September were CNY 251 million compared to CNY 273 million last year, with net income at CNY 88 million versus CNY 99 million previously. Despite these figures showing some contraction, its high-quality earnings and positive free cash flow suggest solid operational footing moving forward.

SZSE:301566 Debt to Equity as at Dec 2024

Micronics Japan (TSE:6871)

Simply Wall St Value Rating: ★★★★★★

Overview: Micronics Japan Co., Ltd. is engaged in the development, manufacturing, and sales of testing and measurement equipment for semiconductors and LCD testing systems globally, with a market capitalization of ¥146.26 billion.

Operations: Micronics Japan generates revenue primarily from its Probe Card Business, which accounts for ¥49.56 billion, while the TE Business contributes ¥2.19 billion.

Micronics Japan, a promising player in the semiconductor space, has seen its earnings surge by 68.9% over the past year, significantly outpacing the industry's 6.7%. This growth positions it well below its estimated fair value by 57.3%, suggesting potential undervaluation. The company's debt-to-equity ratio has impressively decreased from 7.1 to 2.5 over five years, indicating prudent financial management and reduced leverage risk. Despite recent share price volatility, Micronics Japan's high-quality earnings and positive free cash flow underscore its robust financial health and potential for continued growth in this dynamic sector.

TSE:6871 Debt to Equity as at Dec 2024

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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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