As the Canadian market experiences a nuanced phase, with small-cap stocks rallying amid declining interest rates and a broader shift in market leadership, investors are turning their attention to undervalued opportunities. In this context, identifying small-cap stocks with insider buying can be particularly compelling, as such activity often signals confidence in the company's future prospects from those who know it best.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: Doman Building Materials Group is a distributor of building materials primarily in Canada, with a market capitalization of approximately CA$0.33 billion.
Operations: The company generates a substantial portion of its revenue from building materials, amounting to CA$2.45 billion. Over recent periods, it has observed a gross profit margin ranging from 13.37% to 16.31%, indicating the proportion of total sales revenue that the company retains after incurring the direct costs associated with producing the goods it sells.
PE: 8.3x
Doman Building Materials Group, a notable player in Canada's market for undervalued companies, recently affirmed its dividend for the 57th consecutive quarter, underscoring steady financial stewardship amidst modest quarterly earnings fluctuations. With sales reaching C$602 million and net income at C$14 million as of Q1 2024, their consistent performance is complemented by insider confidence demonstrated through recent strategic board appointments and robust renewals of significant credit facilities until 2028. This blend of prudent financial management and insider commitments paints a promising picture for future stability and growth.
Overview: Exchange Income is a diversified company operating primarily in the manufacturing and aerospace & aviation sectors, with a market capitalization of approximately CA$1.60 billion.
Operations: Manufacturing and Aerospace & Aviation are the primary revenue segments for this entity, contributing CA$1.03 billion and CA$1.54 billion respectively. The gross profit margin has shown a trend around 0.35% in recent periods, reflecting the cost of goods sold and operational efficiency in managing expenses related to production and services.
PE: 19.0x
Exchange Income, reflecting a compelling narrative in the Canadian market, recently affirmed consistent dividends, signaling stable financial undertakings with $0.22 per share announced repeatedly over recent months. Despite challenges in covering interest payments from earnings, insider confidence shines through with recent acquisitions of shares by company insiders. This activity underscores their belief in the firm's prospects amidst a backdrop of growing revenues—up significantly to CAD 601.77 million this quarter from CAD 526.84 million last year—and an anticipated earnings growth of 22.51% annually. Their strategic financial maneuvers and insider investments suggest a promising horizon for this overlooked entity.
Overview: Nexus Industrial REIT is a real estate investment trust focusing on industrial properties, with a market capitalization of approximately CA$161.97 million.
Operations: The company generates revenue through investment properties, which totaled CA$161.97 million in the most recent period. It achieved a gross profit of CA$115.98 million after accounting for COGS of CA$45.99 million, reflecting a gross profit margin of 71.61%.
PE: 2.7x
Nexus Industrial REIT, a notable entity in the Canadian industrial real estate sector, has recently demonstrated strong financial performance with a significant increase in net income from CAD 3.72 million to CAD 43.67 million as of Q1 2024. This surge underscores its resilience and strategic focus on enhancing its industrial portfolio by divesting non-core assets, targeting approximately CAD 200 million in property sales to alleviate debt. Additionally, consistent cash distributions affirm its stable revenue streams, fostering investor confidence amid market shifts. The company's commitment is further evidenced by insider confidence shown through recent share purchases by executives, signaling robust internal optimism about future prospects despite forecasts of declining earnings over the next three years.
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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 TSX:DBM TSX:EIF and TSX:NXR.UN.
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