3 Undervalued Small Caps In The United Kingdom With Insider Buying

The United Kingdom's small-cap sector presents an intriguing landscape for investors, with numerous undervalued opportunities backed by insider confidence. This article explores three notable small-cap stocks that have shown signs of undervaluation and significant insider buying activity.


1. **CVS Group (AIM:CVSG)**
CVS Group operates veterinary practices, laboratories, crematorium services, and an online retail business. With a market cap of approximately £1.34 billion, the company has shown signs of being undervalued, with a PE ratio of 23.7x and a discount to fair value of 38.05%. Despite having high external debt, CVS Group's earnings are forecasted to grow by 12.07% annually. Notably, insider confidence is evident as David Wilton, a Non-Executive Director, purchased 2,500 shares worth £26,300 in recent months.


2. **Bytes Technology Group (LSE:BYIT)**
Bytes Technology Group is an IT solutions provider with a market cap of approximately £1.10 billion. The company has shown insider confidence with significant share purchases over the past six months, with a PE ratio of 26.6x and a discount to fair value of 5.23%. Despite relying solely on external borrowing for funding, Bytes Technology Group's earnings are forecasted to grow by 9.23% annually. The company recently approved a final dividend of 6.0 pence per share and a special dividend of 8.7 pence per share, signaling strong shareholder returns.


3. **Card Factory (LSE:CARD)**
Card Factory operates a chain of retail stores specializing in greeting cards, gifts, and party supplies. With a market cap of approximately £0.30 billion, the company has recently shown signs of being undervalued, with a PE ratio of 10.0x. CEO & Executive Director Darcy Willson-Rymer's insider confidence is evident from their purchase of 92,371 shares worth £89,554 in July 2024, reflecting a significant 34.76% increase in their holdings. Despite relying solely on external borrowing for funding, Card Factory projects an annual earnings growth rate of 6.12%.


In conclusion, the three undervalued small caps discussed in this article—CVS Group, Bytes Technology Group, and Card Factory—present compelling investment opportunities backed by insider confidence. While each company faces unique challenges, their earnings growth projections and insider buying activity suggest potential for future value appreciation. Investors should carefully evaluate these companies' fundamentals and industry-specific trends before making investment decisions.