An examination of three undervalued small cap companies with insider trading in the UK

The UK market has shown strong performance, up 1.7% over the past week and up 8.9% over the past 12 months, with profits expected to grow by 13% annually. In such a thriving environment, identifying undervalued small-cap stocks with recent insider purchases can signal potential opportunities for savvy investors.

Top 10 undervalued small cap stocks with insider buying in the UK

Click here to see the full list of 35 stocks in our Undervalued Small Cap Insider Screener.

Let’s look at some standout options based on the scan results.

Simply Wall St Value Rating: ★★★★☆☆

Overview: Aston Martin Lagonda Global Holdings is a luxury car manufacturer known for its high-performance vehicles with a market capitalization of approximately £1.23 billion.

Operations: The automotive segment generated revenues of £1.60 billion and gross profit was £637 million, reflecting a gross profit margin of 39.70%.

EP: -4.3x

Aston Martin Lagonda, a major player in the UK automotive sector, recently reported a decline in first quarter sales to £267.7 million and an increased net loss of £138.9 million. Despite these challenges, investor confidence remains, as evidenced by the recent board re-election and executive appointments at the company’s annual general meeting on May 8, 2024. This move could signal the potential for a reversal of the current undervalued position amid expected strong earnings growth. Their financing strategy includes high-risk external borrowing, which avoids dilution of customer deposits over the past year.

The story continues

Simply Wall St Value Rating: ★★★★☆☆

Overview: Bytes Technology Group is an IT solutions provider with a market capitalization of approximately £1.20 billion.

Operations: The IT solutions provider segment generated revenues of GBP 207.02 million, with a gross profit margin of 70.42%. This reflects the cost efficiency of their business operations, despite rising operational costs in recent periods.

EP: 29.5x

Bytes Technology Group, a noteworthy player in the technology sector, recently reported solid financial results, achieving annual sales of £207 million and net income of £47 million. This improvement reflects strategic earnings per share growth on both a basic and diluted basis. Complementing this financial growth, the company declared an increased special dividend of 8.7 pence per share, signaling a strong profit after tax adjustments. With internal confidence demonstrated by management’s recent stock purchases, this move underscores their belief in the company’s enduring value and growth potential. Additionally, leadership stability is expected with the appointment of Sam Mudd as CEO, who is expected to continue organic expansion based on her successful tenure at Phoenix Software Limited.

Simply Wall St Value Rating: ★★★★★★

Overview: MONY Group operates in a variety of sectors including money, travel, cashback, insurance and home services, and has a market capitalization of approximately £1.2 billion.

Operations: The company generates revenue from multiple segments including money (£100.20 million), travel (£20.60 million), cashback (£59.80 million), insurance (£220 million) and home services (£39 million). pounds). Gross profit margins showed an overall upward trend, reaching approximately 0.68% at the end of the last reporting period, reflecting the effective control of costs of goods sold in relation to revenues generated from the diversified service offering.

EP: 16.8x

MONY Group, formerly known as Moneysupermarket.com, recently showed revenue growth to £115m in the first quarter of 2024 from £106m in the previous year. With earnings expected to grow at over 10% annually, this reflects the company’s solid trajectory. It’s worth noting that insiders have demonstrated confidence with their recent share purchases, which signals strong belief in the company’s prospects. Despite relying solely on external borrowing – a higher risk financing method – insider activity suggests an optimistic outlook for this growing entity.

Taking advantage of

• Take a closer look at our list of 35 undervalued stocks with insider ownership by clicking here.

• Shareholder in one or more of these companies? Make sure you’re never caught off guard by adding your portfolio to Simply Wall St to receive timely notifications of significant stock changes.

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This article by Simply Wall St is of a general nature. We comment based on historical data and analyst forecasts, using only an unbiased methodology, and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative content. Simply Wall St has no position in any of the stocks mentioned.

The companies discussed in this article are LSE:AML LSE:BYIT and LSE:MONY.

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