Over the last 7 days, the Australian stock market has risen 1.4%, and over the past 12 months, it is up 15%. In light of this positive momentum and expected earnings growth of 12% per annum over the next few years, identifying stocks with strong fundamentals and growth potential can be particularly rewarding.

Top 10 Undiscovered Gems With Strong Fundamentals In Australia

Click here to see the full list of 56 stocks from our ASX Undiscovered Gems With Strong Fundamentals screener.

We'll examine a selection from our screener results.

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$1.07 billion.

Operations: DroneShield Limited generates revenue primarily from its Aerospace & Defense segment, amounting to A$67.52 million. The company's market cap stands at approximately A$1.07 billion.

DroneShield, a promising player in the defense sector, has shown impressive growth with earnings surging 612.7% over the past year. Despite being debt-free now, it had a debt-to-equity ratio of 41.5% five years ago. Recent half-year sales reached A$23.99 million, up from A$11.55 million last year, though net loss increased to A$4.8 million from A$2.94 million previously reported losses per share at A$.0078 compared to A$.006 last year indicate some challenges ahead

• Click to explore a detailed breakdown of our findings in DroneShield's health report.

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

Emerald Resources

Simply Wall St Value Rating: ★★★★★☆

Overview: Emerald Resources NL focuses on the exploration and development of mineral reserves in Cambodia and Australia, with a market cap of A$2.58 billion.

Operations: Emerald Resources NL generates revenue primarily from mine operations, amounting to A$366.04 million.

Emerald Resources has been making waves with a 41.9% earnings growth over the past year, far outpacing the Metals and Mining industry’s -0.3%. Trading at 58.8% below its estimated fair value, it offers significant upside potential. The company reported A$371 million in sales for FY2024, up from A$299 million last year, with net income rising to A$84 million from A$59 million. Despite a debt-to-equity ratio increase to 8.5%, interest payments are well-covered by EBIT (18.6x).

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

• Learn about Emerald Resources' historical performance.

MFF Capital Investments

Simply Wall St Value Rating: ★★★★★☆

Overview: MFF Capital Investments Limited is an investment firm manager with a market cap of A$2.30 billion.

Operations: MFF Capital Investments generates revenue primarily from equity investments, amounting to A$659.96 million. The company has a market capitalization of A$2.30 billion.

MFF Capital Investments has shown robust earnings growth, with a 38.3% increase over the past year, outpacing the industry average of 17.7%. The company reported net income of A$447.36 million for FY2024, up from A$323.58 million in FY2023, and basic earnings per share rose to A$0.77 from A$0.55 last year. Trading at 43.9% below its estimated fair value and having more cash than total debt highlights its financial stability and potential undervaluation in the market.

• Dive into the specifics of MFF Capital Investments here with our thorough health report.

• Understand MFF Capital Investments' track record by examining our Past report.

Key Takeaways

• Get an in-depth perspective on all 56 ASX Undiscovered Gems With Strong Fundamentals by using our screener here.
• Already own these companies? Link your portfolio to Simply Wall St and get alerts on any new warning signs to your stocks.
• Discover a world of investment opportunities with Simply Wall St's free app and access unparalleled stock analysis across all markets.

Ready For A Different Approach?

• 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:EMR and ASX:MFF.

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