Fund manager Wilson Asset Management has outlined two businesses in the WAM Microcap Ltd (ASX: WMI) portfolio that could be good performers in the coming years.

WAM Microcap, a listed investment company (LIC), is looking for the "most exciting undervalued growth opportunities in the Australian micro-cap market".

Let's take a look at which small businesses WAM likes.

Stealth Group Holdings Ltd (ASX: SGI)

The fund manager described Stealth Group Holdings as a diversified, multi-channel distribution business that supplies industrial, hardware, safety and consumer products to trade and retail customers across Australia.

During November 2025, the Stealth Group Holdings share price increased sharply (up 60%) after the company announced the acquisition of Hardware & Building Traders (HBT), Australia's largest privately-owned hardware and industrial buying group.

The acquisition significantly increased the ASX small-cap stock's scale, expanding distribution points from 32 to more than 1,200 independent retail and trade stores in Australia, raising purchasing volume by approximately $700 million and adding around 490 suppliers in the ecosystem.

The company increased its FY28 targets to more than $500 million in sales and provided profit margin targets that imply up to $40 million in net profit after tax (NPAT). The fund manager believes these targets are "relatively conservative" in the context of the "significant synergy potential and the company's ability to undertake further acquisitions over time, none of which are included in these targets".

Wilson Asset Management concluded on the ASX small-cap stock:

Whilst the share price increased by more than 60% over the month as investors priced in stronger medium-term growth and returns from the enlarged platform, we continue to see substantial re-rating potential.

EML Payments Ltd (ASX: EML)

WAM described EML Payments as a global payments solutions company that powers business processes "seamlessly for growth and exceptional customer experiences".

During the month, the EML Payments share price fell 11% after the company revealed operating trends that were weaker than expected at its annual general meeting (AGM).

The company's FY26 first quarter update revealed a decline of underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately 42% year over year, as well as a small decline in revenue. But, the company did reaffirm its full-year EBITDA guidance.

WAM noted that the update was interpreted by the market as a "weak" trading result, with soft top-line momentum.

Why does the fund manager like the ASX small-cap stock, considering these headwinds? WAM said:

Led by Chief Executive Officer Anthony Hynes, we continue to have confidence in his ability to execute on the turnaround and drive a re-rating of the share price.

The EML share price is now down around 30% in the past six months, making it a lot cheaper for interested investors.

The post 2 ASX small-cap stocks this fund manager thinks are buys appeared first on The Motley Fool Australia.

With limited liquidity and smaller revenue bases, it doesn't take much for a well-executed strategy to spark a powerful re-rating.

That's exactly what's happened to Stealth Group Holdings Ltd (ASX: SGI).

Over the past 12 months, the Perth-based distribution company has quietly climbed over 275%, turning from a microcap into a serious small-cap contender with one of the strongest growth stories on the market.

What does Stealth Group do?

Stealth Group is a diversified Australian distribution company delivering products and solutions to businesses, trade professionals, and retail consumers across multiple sectors.

Through its two divisions — Industrial & Hardware Distribution and Consumer Products — Stealth operates a multi-channel model that reaches customers across both business and retail markets.

Its industrial arm supplies maintenance, repair and operations (MRO) products such as PPE, tools, fasteners, and consumables through a network of more than 40 branches and stores and 1,100 suppliers. It services more than 40,000 trade and business customers across mining, construction, and government.

Meanwhile, the consumer division distributes and designs tech accessories and everyday products for major retailers like JB Hi-Fi Ltd (ASX:JBH), Coles Group Ltd (ASX:COL), 7-Eleven, Officeworks, and The Good Guys, reaching 3,500 retail stores nationally.

It's a business model that blends wholesale, retail, and e-commerce channels and that flexibility has become one of Stealth's biggest advantages.

What has happened in the past 12 months?

FY25 was a breakout year. Stealth reported record sales of $145.1 million, up 27.6%, while operating earnings (EBITDA) jumped 62% to $9.9 million and net profit more than doubled to $3.1 million.

Margins improved thanks to disciplined cost control and operating leverage, while net debt dropped 37% to $6.8 million, the lowest in five years.

The company also expanded its exclusive and private-label brands, including CAT, WESCO, Harden Tools, Belkin, CASETiFY, Ember, and RIVO Safety, and launched two new ventures: Tool Hire and United Supply Co, an online retail platform.

Then, on 10 November 2025, Stealth announced a transformational acquisition: Hardware & Building Traders, Australia's largest privately owned hardware buying group.

The $22 million all-cash deal adds 1,165 independent stores, $700 million in annual purchases, and a vast network of 490 suppliers. The transaction upgrades Stealth's FY28 sales target from $300 million to more than $500 million, cementing its position as Australia's leading independent alternative to Bunnings.

A micro cap no more

Stealth's story is a reminder of how quickly market perception can change when fundamentals align.

It has turned from a little-known distributor into a scaled national operator with a clear path to higher margins and stronger cash flows.

While the share price has already run hard, Stealth's trajectory shows what's possible when a small business finds its formula and executes relentlessly.

It might not be a buy today, but it's certainly one to watch as this ASX small cap continues its climb toward the big leagues.

The post The stealth success story behind this ASX small cap's 275% share price rally appeared first on The Motley Fool Australia.

Stealth Global shares had closed at just 8.3 cents a share yesterday, but opened at 10 cents a share this morning and rocketed as high as 18 cents a share in early trading (up 80%) before settling to the current share price.

Although today's move is a dramatic one, it actually leaves Stealth Global up just 10% year to date (YTD) – it was down 20% YTD on yesterday's closing price. 

So who is this company? And why is Stealth Global exploding in value (and volatility) today?

An intro to Stealth

Stealth Global is a supplier and distributor of industrial and safety workplace products and essentials. The company describes itself as an Australian multinational distribution group headquartered in Perth, Western Australia. It operates across Australia, United Kingdom and Africa as its primary markets, and other select international markets.

The company's network revolves around 3 operating brands in the workplace supplies space: Heatleys Safety and Industrial, Industrial Supply Group, and BSA Brands. Heatleys is a broad range supplier and distributor of safety and industrial products in Australia, whereas BSA Brands performs a similar function for the United Kingdom and African markets

Industrial Supply Group, however, performs a slightly different function. It is a "member-based buying group" or coalition of sorts, that collaborates with major brands in the industrial equipment space in a wholesale network. These include well-known brands like Sutton Tools and WD-40.

Overall, Stealth Global stocks more than 300,000 products from roughly 1,060 suppliers. Over 40,000 line items are stocked in the company's distribution centres and stores.

Stealth Global has been weathering a difficult 2020 well. In its full-year results for FY2020, the group reported revenue growth of 8% to $68.1 million, and earnings (underlying EBITDA) growth of 68% to $3.2 million. The Australian market remains the crown jewel for Stealth Global though — providing 83% of FY20's sales, which were up 36% on last year's numbers.

Why is the Stealth Global share price rocking today?

The stellar performance of the Stealth Global share price has likely been sparked by an ASX announcement the company released to the markets today just before open. The company has reportedly reached "an agreement in principle" to acquire 100% of the shares of the Brisbane-based C&L Tool Centre Pty Ltd (a private company). 

The reported price tag is $3.83 million, a figure that Stealth Global claims represent 3x FY20's earnings for C&L.

The $3.83 million figure will be made up of $2.45 million in cash, $480,000 in new Stealth Global shares, and $900,000 in deferred payments over the following 12 months after the acquisition is settled on 1 December.

The company had the following to say on the announcement:

C&L is very complementary to the existing Stealth business with similar customer base, suppliers and services that provide the basis in ease of integration, synergies, and expansion. It has solid long-term stakeholder relationships and high-quality products, services, and solutions. These include product sales, fulfilment, distribution, and a service department to large multi-national corporations, large domestic companies, small-to-medium business enterprises, schools and universities, and government agencies.

At the time of writing, the Stealth Global share price is up by 32.53% to 11 cents a share.

The post ASX stock of the day: Stealth Global (ASX:SGI) shares explode 32% on acquisition news appeared first on The Motley Fool Australia.