Under-the-radar ASX mining tech stock surges 25% in 3 weeks! Why more growth could follow

A fund manager has highlighted this ASX small cap as a big opportunity.

| More on:
A builder or miner stretches a measure tape above his head, indicating something is big.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fund manager L1 Capital has picked out a hidden ASX mining tech stock that could be an opportunity due to its growth potential. That stock is Imdex Limited (ASX: IMD), a company that many investors may not have come across before.

Imdex shares have performed very well over the last three weeks, rising by around 25%, as we can see on the chart below.

L1 Capital describes Imdex as a global leader in mining exploration drilling technology.

Imdex itself says it develops cloud-connected sensors and drilling optimisation products to improve the process of identifying and extracting mineral resources for drilling contractors and resource companies globally.

Imdex managing director Bernie Ridgeway once described the company like this:

Our diverse portfolio of products and technologies let drillers and resource companies know what is going on below the ground as accurately and quickly as possible. It is this intelligence that enhances the efficiency and profitability of their operations at all stages of exploration, development and mining.

Why does L1 like this ASX mining tech stock?

The fund manager says Imdex is leveraged to increased mining exploration spending, which "has recently started recovery".

The company also recently acquired the number two player in the space, Devico, which will accelerate Imdex's global growth strategy.

L1 also highlighted the fact that growth is "further supported by the expected launch of the industry's best suite of new products."

But for me, one of the main attractions of this ASX mining tech stock is that the Imdex share price has fallen substantially in the last several months. It's down by around 33% since the 52-week high seen in January 2023.

That decline in valuation has occurred despite the company demonstrating ongoing profit growth. Imdex grew its earnings before interest, tax, depreciation and amortisation (EBITDA) every year between FY20 and FY23, and EBITDA rose 118% between FY19 to FY23's $114.1 million. An extra $8.5 million of EBITDA from the acquired Devico brought FY23 EBITDA to $122.6 million.

What is the Imdex share price valuation?

According to Commsec projections, Imdex could generate 11.2 cents of earnings per share (EPS) in FY24, and 12.7 cents of EPS in FY25.

That would put the company at 16x FY24's estimated earnings and under 14x FY25's estimated earnings.

Despite the short-term pain for the ASX mining tech stock, its share price has increased 36% over the last five years.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Imdex. The Motley Fool Australia has positions in and has recommended Imdex. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Technology Shares

DroneShield shares sink 7% despite big news

Let's see what's going on with this market darling on Thursday.

Read more »

A man activates an arrow shooting up into a cloud sign on his iPad.
Technology Shares

Up 25% since April, is it too late to buy Xero shares today?

A leading expert gives his verdict on the growth outlook for Xero shares.

Read more »

Man looking at digital holograms of graphs, charts, and data.
Technology Shares

2 amazing ASX tech shares I wish I'd bought last year

These tech companies are among the world’s best companies.

Read more »

A man in a business suit and tie places three wooden blocks with the numbers 1, 2, and 3 on them on top of each other.
Broker Notes

3 reasons to buy this booming ASX All Ords tech stock today

A leading broker forecasts more gains to come from this surging ASX All Ords tech stock.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Brokers rerate 3 leading ASX 200 tech stocks

Experts reveal their ratings on the ASX 200 tech sector's three biggest companies.

Read more »

Hologram of a man next to a human robot, symbolising artificial intelligence.
AI Stocks

Why Macquarie forecasts a big rebound for these 2 quality ASX All Ords tech stocks

Macquarie expects a big rebound is coming for these AI linked, ASX All Ords tech stocks.

Read more »

A young man goes over his finances and investment portfolio at home.
Technology Shares

Is it too late to buy DroneShield shares?

This high-flying stock is up 90% since this time last month. Where next? Let's find out.

Read more »

A frustrated male investor frowns with his hands and arms open asking why the share price has dropped today.
Technology Shares

Why this high-flying ASX 200 tech stock just got downgraded

Let's see which stock has been hit with a downgrade today.

Read more »