The Canadian market has shown robust performance, rising by 1.0% over the last week and achieving a 22% increase over the past year, with earnings projected to grow by 15% annually. In this dynamic environment, identifying good stocks often involves looking at companies that demonstrate strong fundamentals and potential for growth, as highlighted by recent insider buying activity in certain small-cap stocks.

Top 10 Undervalued Small Caps With Insider Buying In Canada

Click here to see the full list of 19 stocks from our Undervalued TSX Small Caps With Insider Buying screener.

Let's review some notable picks from our screened stocks.

Badger Infrastructure Solutions

Simply Wall St Value Rating: ★★★★☆☆

Overview: Badger Infrastructure Solutions specializes in providing non-destructive excavating services, with a market capitalization of approximately $1.15 billion.

Operations: Badger Infrastructure Solutions generates revenue primarily from non-destructive excavating services, with recent figures showing a gross profit margin of 28.29%. The company's cost structure includes significant operating expenses and depreciation & amortization costs, impacting its net income margin, which was reported at 5.81% in the latest period.

PE: 24.0x

Badger Infrastructure Solutions, a Canadian small cap, shows potential for growth despite its high debt level. The company reported increased sales of US$186.84 million in Q2 2024, up from US$171.89 million the previous year, with net income rising to US$11.91 million from US$11.01 million. Insider confidence is evident as insiders made share purchases recently, reflecting belief in future prospects. The Board is considering a share repurchase program and has affirmed a quarterly dividend of C$0.18 per share for Q3 2024.

• Click here to discover the nuances of Badger Infrastructure Solutions with our detailed analytical valuation report.

• Explore historical data to track Badger Infrastructure Solutions' performance over time in our Past section.

Calian Group

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Calian Group operates in diverse sectors including IT and Cyber Solutions, Health, Learning, and Advanced Technologies with a market cap of CA$0.89 billion.

Operations: Calian Group generates revenue from four key segments: ITCS, Health, Learning, and Advanced Technologies. The gross profit margin has shown an upward trend over recent periods, reaching 33.17% as of June 2024. Operating expenses are primarily driven by general and administrative costs, sales and marketing expenses, and research and development investments.

PE: 35.4x

Calian Group, a Canadian company in the small-cap sector, is making strategic moves with partnerships like Walmart Canada and Microsoft to expand its digital health and cybersecurity services. Despite facing earnings challenges with net income dropping to C$1.3 million in Q3 2024 from C$4.67 million the previous year, insider confidence remains high as they continue investing in their own shares through a buyback program targeting up to 8.41% of its issued capital by August 2025. With revenue projections reaching up to C$810 million for fiscal year-end September 2024, Calian's involvement in projects such as Telesat Lightspeed positions it well for growth within critical infrastructure sectors.

• Click to explore a detailed breakdown of our findings in Calian Group's valuation report.

• Gain insights into Calian Group's historical performance by reviewing our past performance report.

Exchange Income

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Exchange Income operates in the manufacturing and aerospace & aviation sectors, with a market cap of CA$2.39 billion.

Operations: The company generates revenue primarily from its Manufacturing and Aerospace & Aviation segments, with the latter contributing a higher portion. The gross profit margin has shown fluctuations, peaking at 39.66% in December 2016 before experiencing a decline to 34.72% by June 2024. Operating expenses have consistently increased over the years, reaching CA$614.63 million by June 2024, impacting overall profitability despite rising revenues in both segments.

PE: 22.2x

Exchange Income, a Canadian company with a focus on aviation and manufacturing, has seen insider confidence through share purchases over the past six months. Despite facing higher risk from external borrowing for funding, they continue to pay consistent monthly dividends of C$0.22 per share. With earnings forecasted to grow 25.87% annually, Exchange Income aims to expand its pilot training program for Indigenous students in Nunavut, reflecting their commitment to community engagement and future growth potential in aviation training sectors.

• Take a closer look at Exchange Income's potential here in our valuation report.

• Evaluate Exchange Income's historical performance by accessing our past performance report.

Key Takeaways

• Reveal the 19 hidden gems among our Undervalued TSX Small Caps With Insider Buying screener with a single click here.

• Already own these companies? Bring clarity to your investment decisions by linking up your portfolio with Simply Wall St, where you can monitor all the vital signs of your stocks effortlessly.

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Looking For Alternative Opportunities?

• 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 TSX:BDGI TSX:CGY and TSX:EIF.

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