As the Australian market experiences a risk-off sentiment with the ASX settling just above 8,300 points amidst a choppy earnings season, small-cap stocks continue to draw attention for their potential opportunities. In this environment, identifying promising small-cap stocks involves evaluating those with strong fundamentals and positive insider activity, which can indicate confidence in their future prospects despite broader market volatility.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Abacus Storage King is a company that operates in the self-storage industry, focusing on rental and merchandising services with a market capitalization of A$2.5 billion.
Operations: ASK generates revenue primarily from rental and merchandising, with a recent quarterly revenue of A$230.96 million. The company has seen fluctuations in its net income margin, which reached 89.02% in the latest period after a series of increases and decreases over previous quarters. Operating expenses have been significant, with general and administrative expenses being a notable component.
PE: 7.8x
Abacus Storage King, a smaller player in the Australian market, recently reported half-year sales of A$108.04 million and net income of A$67.81 million, marking a significant improvement from the previous year. Despite earnings forecasted to decline by 11.6% annually over the next three years, revenue is expected to grow by 6.1% per year. Insider confidence is evident with recent share purchases spanning several months in late 2024 and early 2025, suggesting potential optimism about future performance amidst higher-risk external borrowing as its sole funding source.
Overview: Collins Foods operates a chain of fast-food restaurants, including Taco Bell in Australia and KFC in both Europe and Australia, with a market capitalization of A$1.51 billion.
Operations: Collins Foods generates revenue primarily from its KFC operations in Australia and Europe, with a smaller contribution from Taco Bell in Australia. The company's gross profit margin has shown variability, reaching 50.42% recently. Operating expenses are significant, driven mainly by sales and marketing as well as general and administrative costs.
PE: 19.1x
Collins Foods, a notable player in the fast-food sector, is expanding its footprint with plans to open seven new restaurants by fiscal year-end 2025. Despite recent earnings showing a dip in net income to A$24.12 million from A$50.45 million the previous year, insider confidence remains strong with significant share purchases observed recently. The company’s reliance on external borrowing poses some risk; however, projected annual earnings growth of 18% suggests potential for future value appreciation.
Overview: Cromwell Property Group is a real estate investment and funds management company with operations focusing on co-investments, investment portfolios, and funds and asset management, boasting a market capitalization of approximately A$2.55 billion.
Operations: Cromwell Property Group generates revenue primarily from its Investment Portfolio, Co-Investments, and Funds and Asset Management segments. The company experienced fluctuations in its net income margin, with recent periods showing negative margins such as -1.71% in December 2023. Operating expenses have varied over time but were recorded at A$46.4 million by June 2024.
PE: -4.0x
Cromwell Property Group, operating within the Australian real estate sector, presents a mixed picture for investors. Despite its small size, it has garnered insider confidence with recent share purchases in 2024. However, Cromwell faces challenges; earnings have declined by 53% annually over the past five years and interest payments aren't well covered by current earnings. The company declared a cash dividend of A$0.0075 per share on December 20, 2024, indicating ongoing shareholder returns amidst financial hurdles.
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:ASK ASX:CKF and ASX:CMW.
