The Australian market has recently seen a mix of gains and losses, with the ASX200 closing up 0.58% amid varied earnings results and flat retail sales data. As analysts digest the implications for interest rates, small-cap stocks like those in the Industrials and Energy sectors have shown resilience. In this dynamic environment, identifying promising small-cap stocks requires careful consideration of their growth potential and market positioning. Here are three undiscovered gems in Australia that stand out for their promising potential amidst current market conditions.

Top 10 Undiscovered Gems With Strong Fundamentals In Australia

Click here to see the full list of 53 stocks from our ASX Undiscovered Gems With Strong Fundamentals screener.

We're going to check out a few of the best picks from our screener tool.

DroneShield

Simply Wall St Value Rating: ★★★★★★

Overview: DroneShield Limited develops, commercializes, and sells hardware and software technology for drone detection and security in Australia and the United States, with a market cap of A$1.16 billion.

Operations: DroneShield Limited generates its revenue primarily from the Aerospace & Defense segment, amounting to A$67.52 million.

DroneShield has seen impressive earnings growth of 612.7% over the past year, significantly outpacing the Aerospace & Defense industry’s 15.5%. Despite this, shareholders faced dilution recently with a follow-on equity offering raising A$120M in August 2024. The company reported half-year sales of A$23.99M compared to A$11.55M a year ago, but net loss widened to A$4.8M from A$2.94M previously, reflecting ongoing volatility and investment needs for future growth prospects in this small-cap space.

• Click here and access our complete health analysis report to understand the dynamics of DroneShield.

• Gain insights into DroneShield's historical performance by reviewing our past performance report.

RPMGlobal Holdings

Simply Wall St Value Rating: ★★★★★★

Overview: RPMGlobal Holdings Limited develops and provides mining software solutions across Australia, Asia, the Americas, Africa, and Europe with a market cap of A$586.92 million.

Operations: RPMGlobal Holdings generates revenue primarily from its Software segment (A$72.67 million) and Advisory segment (A$31.41 million). The company has a market cap of A$586.92 million.

RPMGlobal Holdings, a notable player in the software industry, reported impressive financial results for the year ending June 30, 2024. Revenue increased to A$104.19 million from A$91.56 million the previous year. Net income surged to A$8.66 million compared to A$3.69 million last year, reflecting strong operational performance and strategic growth initiatives. Basic earnings per share rose to A$0.038 from A$0.016 a year earlier, showcasing significant profitability improvements and robust earnings quality without any debt burden over the past five years.

• Get an in-depth perspective on RPMGlobal Holdings' performance by reading our health report here.

• Explore historical data to track RPMGlobal Holdings' performance over time in our Past section.

Supply Network

Simply Wall St Value Rating: ★★★★★★

Overview: Supply Network Limited supplies aftermarket parts to the commercial vehicle industry in Australia and New Zealand, with a market cap of A$1.24 billion.

Operations: Supply Network Limited generates revenue of A$302.72 million from providing aftermarket parts to the commercial vehicle market in Australia and New Zealand. The company has a market cap of approximately A$1.24 billion.

Supply Network has shown robust performance with earnings growing 20.5% over the past year, outpacing the Retail Distributors industry’s 2.3%. The company reported A$302.6 million in sales for FY2024, up from A$252.25 million last year, and net income increased to A$33.03 million from A$27.41 million. Notably, Supply Network's net debt to equity ratio stands at a satisfactory 3.6%, and its EBIT covers interest payments by 22.6 times, indicating strong financial health.

• Unlock comprehensive insights into our analysis of Supply Network stock in this health report.

• Review our historical performance report to gain insights into Supply Network's's past performance.

Taking Advantage

• Take a closer look at our ASX Undiscovered Gems With Strong Fundamentals list of 53 companies by clicking here.

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Interested In Other Possibilities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

• Find companies with promising cash flow potential yet trading below their fair value.

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 ASX:DRO ASX:RUL and ASX:SNL.

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