As global markets react to the recent U.S. election results, small-cap stocks have captured investor attention with the Russell 2000 Index leading gains, despite remaining slightly below its record high from November 2021. This surge reflects optimism around potential growth and deregulation under a new administration, creating a fertile ground for identifying undervalued opportunities in this segment. In such an environment, a good stock is often characterized by strong fundamentals and strategic insider buying that aligns with broader market sentiments of growth and reduced regulatory pressures.
Overview: Tourism Holdings is a company engaged in tourism and vehicle rental operations across New Zealand, Australia, the USA, Canada, and the UK/Ireland, with a market capitalization of NZ$1.02 billion.
Operations: Tourism Holdings generates revenue primarily from its Australian Rentals, Sales & Manufacturing segment, followed by the Action Manufacturing Group and USA Rentals & Sales. The company's cost of goods sold (COGS) has increased over time, impacting gross profit margins which have seen a decline from 74.52% in June 2015 to 59.40% in June 2024. Operating expenses also play a significant role in financial performance, with general and administrative expenses being a major component.
PE: 10.8x
Tourism Holdings, a company in the travel sector, recently reported revenue of NZ$921.7 million for FY24, up from NZ$663.8 million the previous year. Despite this growth, net income decreased to NZ$39.4 million from NZ$49.9 million due to slimmer profit margins at 4.3%, down from 7.5%. Insider confidence is evident with recent share purchases by insiders over the past year, suggesting potential undervaluation in this small-cap stock's current market position amidst its forecasted earnings growth of 20% annually.
Overview: New Wave Group operates in the corporate, sports and leisure, and gifts and home furnishings sectors with a market cap of SEK 6.81 billion.
Operations: The company generates revenue primarily from three segments: Corporate, Sports & Leisure, and Gifts & Home Furnishings. Over recent periods, the gross profit margin has shown an upward trend, reaching 50.28% by September 2024. Operating expenses have been a significant cost factor, with general and administrative expenses consistently forming a substantial part of these costs.
PE: 14.9x
New Wave Group, a smaller company in its industry, recently reported a dip in net income for the third quarter of 2024 to SEK 204.2 million from SEK 270.9 million the previous year, with sales slightly down to SEK 2,308.3 million. Despite this, insider confidence is evident as they increased their holdings over the past months. The appointment of Anna Gullmarstrand as CFO might bring fresh strategic insights. Forecasts suggest potential earnings growth of 19% annually, indicating possible future value opportunities despite current challenges with higher-risk external borrowing sources.
Overview: China XLX Fertiliser is engaged in the production and sale of various chemical products, including urea, compound fertilizers, methanol, and melamine, with a market capitalization of CN¥8.13 billion.
Operations: The company's primary revenue streams include Urea, Compound Fertiliser, and Methanol. Over the analyzed period, the gross profit margin has fluctuated, reaching a high of 24.46% in mid-2019 before declining to 15.58% by mid-2023. Operating expenses have shown an upward trend, impacting net income margins which varied from a peak of 7.63% at the end of 2021 to lower levels in subsequent years.
PE: 4.2x
China XLX Fertiliser, a company in the fertiliser industry, displays insider confidence with Executive Director Qingjin Zhang purchasing 160,000 shares for CNY 672K recently. Despite its high debt levels due to reliance on external borrowing, the company is positioned for potential growth with an expected earnings increase of 11.59% annually. Recent board changes include Mr. Wong Wing Wang as data protection officer while maintaining his CFO role. Upcoming financial results will be announced on October 30, 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 NZSE:THL OM:NEWA B and SEHK:1866.
