In a week marked by record highs for major U.S. stock indices and a notable divergence in performance between growth and value stocks, the small-cap Russell 2000 Index saw a decline, highlighting the mixed sentiment around smaller companies. Amidst this backdrop of economic indicators such as rebounding job growth and anticipated Federal Reserve policy shifts, identifying promising small-cap stocks can be an opportunity for investors seeking to capitalize on market inefficiencies. In this environment, undiscovered gems with strong fundamentals and potential for growth may offer attractive prospects amidst broader market fluctuations.

Click here to see the full list of 4640 stocks from our Undiscovered Gems With Strong Fundamentals screener.

Here's a peek at a few of the choices from the screener.

Simply Wall St Value Rating: ★★★★★★

Overview: Zhejiang Zhaolong Interconnect Technology Co., Ltd. operates in the digital communication cable industry and has a market capitalization of CN¥8.86 billion.

Operations: Zhaolong Interconnect generates revenue primarily from the digital communication cable industry, amounting to CN¥1.75 billion. The company has a market capitalization of CN¥8.86 billion.

Zhejiang Zhaolong Interconnect Technology, a nimble player in the electrical industry, has shown impressive financial health with no debt and a significant reduction from a 41.6% debt-to-equity ratio five years ago. The company reported sales of CN¥1.34 billion for the first nine months of 2024, up from CN¥1.14 billion last year, highlighting robust growth. A notable one-off gain of CN¥39.9 million impacted recent earnings results; however, net income still rose to CN¥89.85 million from CN¥70.17 million previously. Looking ahead, earnings are expected to grow annually by 25%, suggesting potential value for investors seeking growth opportunities in this sector.