Amid a backdrop of declining indices, with the FTSE 100 and FTSE 250 both experiencing downturns influenced by weak trade data from China, the United Kingdom's market landscape presents a challenging environment for investors. In such conditions, identifying undervalued small-cap stocks that show promising insider actions can offer potential opportunities for discerning investors.
Top 10 Undervalued Small Caps With Insider Buying In The United Kingdom
Overview: CVS Group operates a diverse range of veterinary services including practices, laboratories, crematoriums, and an online retail business, with a market capitalization of approximately £1.5 billion.
Operations: The primary revenue generators for the entity are veterinary practices and online retail business, contributing £573 million and £49.6 million respectively. Gross profit margins have shown a notable increase from 33.71% to 43.11% over the observed periods, reflecting an improving efficiency in managing cost of goods sold relative to revenue.
PE: 21.6x
Recently appointed Chair David Wilton demonstrated insider confidence in CVS Group by purchasing 2,500 shares, signaling a robust belief in the company's trajectory. This move aligns with CVS's strategic enhancements and leadership transitions, including filling crucial roles after an executive resignation. Despite a high debt level, the company is poised for an annual earnings growth of approximately 13%. These elements suggest that CVS Group might be undervalued, presenting a potentially attractive opportunity for investors looking at promising prospects within the UK market.
Overview: Just Group is a UK-based financial services company specializing in retirement products and services, with a market capitalization of approximately £0.60 billion.
Operations: JUST experienced a notable increase in gross profit margin from 0.12% in December 2021 to 0.54% by December 2023, reflecting substantial growth over two years. During this period, revenue also grew significantly from £2.54 billion to £3.14 billion, indicating an expansion in its operational scale and efficiency.
PE: 9.9x
Just Group, a notable player in the UK's undervalued sector, recently declared a dividend increase to 1.50 pence per share, underscoring their stable financial stance as of May 2024. With earnings expected to climb by nearly 10% annually, their reliance on external borrowing—though riskier—has not deterred insider confidence; insiders have recently bolstered their stakes, signaling strong belief in the firm’s prospects. This strategic positioning might hint at latent growth potential amidst a challenging funding landscape.
Overview: Liontrust Asset Management is a UK-based investment management company with a market capitalization of approximately £0.53 billion, focusing primarily on managing funds across various asset classes.
Operations: Investment Management generated £197.89 million in revenue, with a gross profit margin consistently near 94%, reflecting minimal cost of goods sold relative to revenue. The net income has shown variability, culminating in a loss with the latest reported figures indicating a net income margin of -1.76%.
PE: -122.9x
Amidst a challenging financial landscape, Liontrust Asset Management has shown signs of resilience and potential underpricing. Recently appointed executives hint at strategic revitalization, aligning with insider confidence demonstrated by recent share purchases. Despite a downturn in earnings for the year ended March 31, 2024, with sales dropping to £197.89 million and a net loss of £3.49 million, the company maintains a stable dividend payout. These elements suggest that Liontrust may be poised for recovery, reflecting an attractive entry point for investors looking at promising yet overlooked entities in the UK market.
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 AIM:CVSG LSE:JUST and LSE:LIO.
