As the Australian market closed slightly down on the penultimate trading day of 2024, with only Energy and Healthcare sectors showing positive movement, broader sentiment remains cautious amid slow trade and profit-taking. In this environment, identifying promising small-cap stocks can be challenging but rewarding, especially when considering factors like recent insider buying which may signal confidence in a company's future prospects.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Deterra Royalties is a company focused on managing royalty arrangements, primarily deriving its income from these agreements, with a market cap of A$2.33 billion.
Operations: Deterra Royalties generates revenue primarily through royalty arrangements, with recent figures indicating A$240.51 million in revenue. The cost of goods sold (COGS) for the latest period is A$9.08 million, resulting in a gross profit margin of 96.22%. Operating expenses have seen an increase over time, reaching A$3.98 million in the most recent data point.
PE: 13.0x
Deterra Royalties, a small player in Australia's market, recently participated in the John Tumazos Very Independent Research 2024 Virtual Conference. While earnings are projected to dip by an average of 6.1% annually over the next three years, insider confidence is evident with recent share purchases. The company relies entirely on external borrowing for funding, which poses higher risks compared to customer deposits. Despite these challenges, its position in the industry offers potential opportunities for growth and value realization.
Overview: Healius is a healthcare company that operates in the pathology and imaging sectors, with a market cap of A$2.50 billion.
Operations: Healius generates revenue primarily from its Pathology and Imaging segments, with Pathology contributing significantly more to the total revenue. Over recent periods, the company has experienced a declining trend in its net income margin, reaching -58.17% by December 2023. The gross profit margin also shows a downward trajectory, standing at 31.45% as of December 2023.
PE: -1.6x
Healius, a key player in Australia's healthcare sector, is gaining attention for its potential value. Recent insider confidence is evident with significant share purchases by executives over the past year. The company anticipates earnings growth of 90% annually, driven by strategic initiatives and a focus on efficiency. Despite relying solely on external borrowing for funding, Healius aims to leverage its financial strategies to enhance profitability. The recent board changes could bolster governance and strategic direction moving forward.
Overview: Infomedia is a company that specializes in providing software solutions and services to the automotive industry, with operations focused on publishing periodicals and a market capitalization of A$366.43 million.
Operations: Revenue primarily stems from publishing periodicals, with recent figures reaching A$140.83 million. Operating expenses have been significant, notably in general and administrative areas, which reached A$74.38 million recently. The gross profit margin has remained around 95%, indicating efficient cost management relative to revenue generation.
PE: 42.5x
Infomedia, an Australian company, is exploring mergers and acquisitions to drive long-term shareholder value. With a forecasted earnings growth of 21% annually, the company shows potential for expansion. However, its reliance on external borrowing as the sole funding source introduces higher risk. Insider confidence is evident with recent share purchases by executives throughout 2024. The addition of Joe Powell to the board brings valuable experience in digital and education sectors, positioning Infomedia for strategic growth opportunities.
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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.
Companies discussed in this article include ASX:DRR ASX:HLS and ASX:IFM.
