Uncovering Hidden Gems: 3 Undervalued Small Caps on ASX With Insider Buying

In the dynamic world of Australian stocks, small-cap companies often fly under the radar, presenting unique investment opportunities for those willing to dig deeper. While larger companies grab the limelight, small caps with insider buying activity can indicate untapped potential and undervalued status. This article explores three such companies on the ASX, offering a balanced analysis of their market positions, growth prospects, and the catalysts driving insider buying.

Seven West Media (ASX: SWM) is a media conglomerate with a market cap of $675 million, trading at a significant discount to its fair value estimate of $0.60. The company's recent half-year result was commended by analyst Brian Han, who noted the company's financial position has improved markedly thanks to digital-centric 7plus' growing earnings contributions. Despite a 'High' uncertainty rating attached to its fair value, insider buying activity suggests potential value in SWM.

Kogan (ASX: KGN) is an online retailer with a market cap of approximately $1.2 billion, trading at a 61% discount to its fair value estimate of $10.70. After a period of heavy product discounting, management expects improving third-party and exclusive brands contributions to group earnings. Kogan's recent expansion into delivering bulky goods to new cities positions it well to compete against larger rivals. The 'Very High' uncertainty rating should be considered, but the company's strategic initiatives indicate potential for growth.

MyState (ASX: MYS) is a small Australian bank with a market cap of around $750 million, trading at a 59% discount to its fair value estimate of $5.20. Although the recent collapse of US-based Silicon Valley Bank raised concerns, analysts do not believe that Australian banks will be materially affected. MyState's unique position as a smaller player in the market presents an opportunity for long-term growth as it continues to expand its customer base.

Insider buying activity in these undervalued small caps on the ASX can be a strong indication of genuine confidence in the company's future prospects. However, it's essential to consider that insiders may also capitalize on undervalued share prices. A balanced analysis of market sentiment, analyst ratings, and specific catalysts driving insider buying is crucial for investors seeking untapped potential in the Australian market.

As of 30 September 2024, Morningstar valuation overview of Australian-listed firms under coverage revealed that several stocks are trading at attractive prices, with certain names trading at discounts to their long-term intrinsic value of up to 40% or more. This underscores the potential for investors to uncover hidden gems in the Australian market.


In conclusion, three undervalued small caps on the ASX with insider buying in Australia offer attractive investment opportunities, presenting significant long-term growth prospects. Their discounted valuations, coupled with positive insider activity and strong outlooks, make a compelling case for investors seeking untapped potential in the Australian market. By carefully evaluating market sentiment, analyst ratings, and specific catalysts driving insider buying, investors can identify valuable small-cap stocks and capitalize on their growth potential.