As the Australian market wraps up the year, the ASX 200 has shown resilience with a modest gain of 0.29%, even as inflation concerns linger following the Reserve Bank of Australia's decision to keep interest rates unchanged. Amidst this backdrop, small-cap stocks continue to capture interest, particularly those demonstrating potential value and insider activity—a combination that can signal confidence in a company's prospects despite broader economic uncertainties.
Top 10 Undervalued Small Caps With Insider Buying In Australia
Overview: Abacus Storage King operates in the self-storage industry, focusing on rental and merchandising services, with a market capitalization of A$1.25 billion.
Operations: ASK generates revenue primarily from rental and merchandising activities, with a recent gross profit margin of 80.50%. The company experienced fluctuations in net income margin, reaching as high as 62.67% and as low as 5.81% over the reported periods. Operating expenses have shown an upward trend, impacting overall profitability alongside significant non-operating expenses.
PE: 11.3x
Abacus Storage King, a player in the self-storage industry, has caught attention for its small cap nature and perceived value. Despite facing a forecasted 1.7% annual decline in earnings over the next three years, revenue is expected to grow by 7.42% annually. Insider confidence is evident with recent share purchases from January to September 2024. The company relies on external borrowing for funding, which adds risk but also potential upside as they navigate growth opportunities in a competitive market.
Overview: Collins Foods operates a network of fast-food restaurants, including Taco Bell in Australia and KFC in both Europe and Australia, with a market capitalization of A$1.69 billion.
Operations: Collins Foods generates revenue primarily from its KFC Restaurants in Australia and Europe, with significant contributions from Taco Bell in Australia. The company's gross profit margin has seen fluctuations, reaching 50.44% recently. Operating expenses are a major cost component, with sales and marketing as well as general and administrative expenses being substantial contributors.
PE: 15.6x
Collins Foods, an Australian company with a small market footprint, is expanding its restaurant portfolio by adding seven new locations in fiscal 2025. Despite a dip in net income to A$24.12 million for the half-year ending October 2024 from A$50.45 million previously, the company's leadership change with Xavier Simonet as CEO may drive strategic growth. Insiders have shown confidence through recent share purchases, reflecting potential value recognition amidst evolving business dynamics and expansion efforts in Australia and Europe.
Overview: Rural Funds Group is an Australian agricultural real estate investment trust that focuses on leasing properties for cattle, almonds, cropping, vineyards, macadamias, and other agricultural activities with a market capitalization of A$1.03 billion.
Operations: Rural Funds Group generates revenue primarily from cattle, almonds, and macadamias. The company's gross profit margin has shown a declining trend from 88.96% in March 2015 to 69.37% in June 2024. Operating expenses have increased over time, impacting overall profitability.
PE: 8.3x
Rural Funds Group, a player in Australia's agricultural sector, exhibits characteristics of an undervalued stock. Despite challenges like declining earnings forecasts and interest payments not well-covered by earnings, insider confidence is evident with recent share purchases throughout 2024. The company faces risks from its sole reliance on external borrowing for funding. Profit margins have slipped to 74% over the past year. However, dividend affirmations indicate commitment to shareholder returns with A$0.029 per unit announced for December 2024.
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:RFF.
