Amidst the backdrop of a faltering FTSE 100 and sluggish global economic signals, particularly from China, the UK market has seen its major indices slip as concerns over commodity demand and domestic consumption in key international markets weigh heavily. Despite these challenges, small-cap stocks often present unique opportunities for investors seeking growth potential that may not be fully reflected in broader market movements. In this environment, identifying small-cap companies with solid fundamentals and insider activity can be an intriguing strategy.
Top 10 Undervalued Small Caps With Insider Buying In The United Kingdom
Overview: ASOS is an online retailer specializing in fashion and beauty products with a market capitalization of approximately £1.28 billion.
Operations: ASOS generates its revenue primarily through online retailing, with recent figures showing £2.91 billion in sales. The company's gross profit margin has shown a declining trend, reaching 40.01% in the latest period. Operating expenses are significant, notably in general and administrative costs and sales and marketing efforts.
PE: -1.3x
ASOS, a notable player in the UK market, has been navigating financial challenges, reporting sales of £2.9 billion for the fiscal year ending September 2024, down from £3.5 billion previously. Despite a net loss of £338.7 million and high debt levels due to reliance on external borrowing, insider confidence is evident with recent share purchases in late 2024. The company anticipates revenue growth ranging from -9% to +6% for 2025, suggesting potential recovery amidst its current undervaluation challenges.
Overview: NCC Group is a global cybersecurity and risk mitigation company with operations focused on providing services such as cyber security consulting and managed detection, boasting a market cap of approximately £0.46 billion.
Operations: The company derives its revenue primarily from Cyber Security (£256.58 million) and Escode (£65.55 million). The gross profit margin has shown variability, reaching 41.61% in recent periods, while net income has experienced fluctuations with a recent negative trend, registering -£24.38 million by January 2025. Operating expenses have been significant, contributing to the overall financial performance dynamics observed over the analyzed periods.
PE: -17.2x
NCC Group, a smaller UK firm, has shown insider confidence with recent share purchases. Despite reporting a net loss of £32.5 million for the sixteen months ending September 2024, they anticipate earnings growth of nearly 75% annually. This potential for growth contrasts with their reliance on higher-risk external borrowing as their sole funding source. Recently, NCC proposed a final dividend of 1.5p per share to be paid in April 2025, indicating commitment to returning value to shareholders amidst financial challenges.
Overview: Supermarket Income REIT focuses on investing in supermarket properties across the UK, with a market cap of £1.21 billion.
Operations: The company's revenue is primarily derived from real estate investments, with a reported gross profit margin consistently at 100.00%. Operating expenses have shown a gradual increase, reaching £5.75 million in the latest period. Net income margins have experienced significant fluctuations, recently recording a negative -0.20%.
PE: -39.5x
Supermarket Income REIT, a UK-based property investment firm, recently declared a dividend of 1.53 pence per share for Q2 2024, indicating steady income distribution to shareholders. Despite relying solely on external borrowing for funding, the company maintains a solid financial position with debt well-covered by operating cash flow. Insider confidence is evident as they increased their holdings over the past year. Earnings are projected to grow by 48% annually, suggesting potential growth in this segment.
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 LSE:ASC LSE:NCC and LSE:SUPR.
