Exploring Undervalued Small Caps With Insider Action In June 2024

As the Canadian market experiences a moderation in inflation and anticipates further rate cuts from the Bank of Canada, investors are closely watching for opportunities within the small-cap sector. In this context, identifying undervalued small-cap stocks with recent insider buying can be a prudent strategy to uncover potential growth opportunities amidst evolving economic conditions.

Top 10 Undervalued Small Caps With Insider Buying In Canada

Name	PE	PS	Discount to Fair Value	Value Rating
Martinrea International	5.9x	0.2x	47.92%	★★★★★★
Dundee Precious Metals	8.0x	2.7x	47.80%	★★★★★★
Canaccord Genuity Group	NA	0.5x	38.51%	★★★★★★
Calfrac Well Services	2.2x	0.2x	6.03%	★★★★★☆
Primaris Real Estate Investment Trust	11.5x	3.0x	34.84%	★★★★★☆
Guardian Capital Group	10.3x	4.0x	32.63%	★★★★☆☆
Nexus Industrial REIT	2.4x	3.0x	17.25%	★★★★☆☆
Sagicor Financial	1.2x	0.4x	-93.54%	★★★★☆☆
Westshore Terminals Investment	13.9x	3.8x	2.41%	★★★☆☆☆
Freehold Royalties	15.1x	6.5x	48.20%	★★★☆☆☆

Click here to see the full list of 32 stocks from our Undervalued TSX Small Caps With Insider Buying screener.

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

Doman Building Materials Group (TSX:DBM)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Doman Building Materials Group is a company specializing in the distribution of building materials, with a significant portion of its business focused in this sector.

Operations: Building Materials generates CA$2.45 billion in revenue, with a gross profit margin that has increased to 16.31% by the latest date provided, reflecting an upward trend over the observed periods. The company's net income margin also showed growth, reaching 3.03% in the most recent report.

PE: 8.3x

Recently, Doman Building Materials Group demonstrated insider confidence as Amardeip Doman acquired 73,500 shares for CA$524,415. This purchase underscores a strong belief in the firm's prospects amidst a backdrop of modest quarterly performance with first-quarter sales slightly down to CA$602 million from CA$609 million year-over-year. Despite this dip, the company maintains a consistent dividend payout and has secured a renewed CA$500 million credit facility until 2028. These moves suggest stability and potential underappreciated by the market.

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

• Review our historical performance report to gain insights into Doman Building Materials Group's's past performance.

Nexus Industrial REIT (TSX:NXR.UN)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Nexus Industrial REIT is a real estate investment trust specializing in industrial properties, with a market capitalization of approximately CA$161.97 million.

Operations: From the provided financial data, the gross profit margin of Nexus Industrial REIT has shown a progressive increase over several periods, reaching 71.61% by March 2024. This growth is reflective of effective cost management in relation to revenue generation from its investment properties, which totaled CA$161.97 million as of the same date.

PE: 2.4x

Recently, Nexus Industrial REIT showcased a robust financial performance, with first-quarter sales and net income significantly surpassing the previous year's figures. Amidst this growth, they are strategically divesting non-core assets to focus on industrial properties, aiming for a $200 million target that will help reduce debt. Concurrently, consistent dividends reflect stable cash flow confidence. Despite potential earnings volatility due to one-off items and expected declines in future earnings, insider confidence is evident as they recently purchased shares, signaling belief in the company's strategic direction and long-term value amidst market underestimations.

• Navigate through the intricacies of Nexus Industrial REIT with our comprehensive valuation report here.

• Evaluate Nexus Industrial REIT's historical performance by accessing our past performance report.

Primaris Real Estate Investment Trust (TSX:PMZ.UN)

Simply Wall St Value Rating: ★★★★★☆

Overview: Primaris Real Estate Investment Trust specializes in the ownership, management, and development of investment properties.

Operations: The entity generates revenue primarily through the ownership, management, and development of investment properties, with its latest reported quarterly revenue at CA$433.82 million. Over recent periods, it has observed a gross profit margin of approximately 56.72%, reflecting the cost efficiency in its operations relative to generated revenues.

PE: 11.5x

Primaris Real Estate Investment Trust has demonstrated a robust financial trajectory with a notable increase in quarterly sales from CAD 96 million to CAD 119 million, alongside a rise in net income from CAD 36 million to CAD 46 million. Recent insider confidence is evidenced by their purchase of shares, totaling 57,500 units for CAD 0.8 million between March and April 2024, underscoring their belief in the company's prospects. Additionally, consistent dividend payments and strategic expansions like the Halifax Shopping Centre redevelopment highlight its growth potential within the competitive real estate sector.

• Click here to discover the nuances of Primaris Real Estate Investment Trust with our detailed analytical valuation report.

• Gain insights into Primaris Real Estate Investment Trust's historical performance by reviewing our past performance report.

Seize The Opportunity

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Interested In Other Possibilities?

• 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.

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