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Three Undiscovered German Gems with Strong Foundations

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As the European Central Bank's recent rate cuts spark optimism and Germany's DAX index sees a notable rise, the spotlight turns to small-cap stocks that might be overlooked in broader market discussions. In this favorable environment, identifying stocks with robust foundations becomes crucial for potential long-term gains.

Top 10 Undiscovered Gems With Strong Fundamentals In Germany

Name

Debt To Equity

Revenue Growth

Earnings Growth

Health Rating

Mineralbrunnen Überkingen-Teinach GmbH KGaA

19.91%

0.96%

-5.02%

★★★★★★

Westag

NA

-1.56%

-21.68%

★★★★★★

FRoSTA

8.18%

4.36%

16.00%

★★★★★★

EnviTec Biogas

37.96%

19.34%

51.22%

★★★★★★

Mühlbauer Holding

NA

10.49%

-12.73%

★★★★★★

Südwestdeutsche Salzwerke

0.30%

4.57%

25.01%

★★★★★☆

HOMAG Group

NA

-31.14%

23.43%

★★★★★☆

Baader Bank

91.28%

12.42%

-8.00%

★★★★★☆

Wilson

64.79%

30.09%

68.29%

★★★★☆☆

BAUER

78.29%

2.30%

-38.28%

★★★★☆☆

Click here to see the full list of 54 stocks from our German Undiscovered Gems With Strong Fundamentals screener.

Here's a peek at a few of the choices from the screener.

M1 Kliniken

Simply Wall St Value Rating: ★★★★★☆

Overview: M1 Kliniken AG, with a market cap of €332.14 million, operates in the field of aesthetic medicine and plastic surgery services across Germany, Austria, the Netherlands, Switzerland, the United Kingdom, Croatia, Hungary, Bulgaria, Romania, and Australia.

Operations: M1 Kliniken AG generates revenue primarily from its Trade segment (€251.09 million) and Beauty segment (€82.23 million).

M1 Kliniken's earnings soared 163.7% over the past year, far outpacing the Healthcare industry's 30.9%. Recent half-year sales hit €167.74 million, up from €150.79 million last year, while net income jumped to €9.9 million from €3.42 million. The company repurchased shares in 2024 and trades at 66% below its estimated fair value, suggesting potential undervaluation despite a volatile share price recently and an increased debt-to-equity ratio of 8.5%.

XTRA:M12 Debt to Equity as at Sep 2024
XTRA:M12 Debt to Equity as at Sep 2024

PharmaSGP Holding

Simply Wall St Value Rating: ★★★★★☆

Overview: PharmaSGP Holding SE manufactures and sells over-the-counter drugs and other healthcare products in Germany, with a market cap of €256.59 million.

Operations: PharmaSGP Holding SE generates revenue primarily from its pharmaceutical segment, which reported €107.29 million.

PharmaSGP Holding, a small player in the pharmaceutical sector, has seen its earnings grow by 38.1% over the past year, outpacing the industry average of 1.5%. Trading at 80.3% below its estimated fair value, PSG's high-quality earnings and strong EBIT coverage of interest payments (7.4x) make it an intriguing prospect. Despite a net debt to equity ratio of 60.3%, which is considered high, recent share repurchases indicate confidence from within the company