Three Top Undervalued Small Caps In Canada With Insider Buying

The Canadian market has seen notable volatility, with a near 5% pullback in August followed by an impressive recovery, driven by positive earnings growth and an expanding economy. As the focus shifts from tech heavyweights to broader market opportunities, undervalued small-cap stocks with insider buying present intriguing investment prospects.

Top 10 Undervalued Small Caps With Insider Buying In Canada

Name	PE	PS	Discount to Fair Value	Value Rating
Calfrac Well Services	2.7x	0.2x	33.85%	★★★★★★
Nexus Industrial REIT	3.6x	3.6x	23.33%	★★★★★☆
Obsidian Energy	6.5x	1.0x	48.77%	★★★★★☆
Flagship Communities Real Estate Investment Trust	3.6x	3.8x	46.81%	★★★★★☆
Trican Well Service	8.1x	1.0x	5.98%	★★★★☆☆
Hemisphere Energy	6.0x	2.3x	8.84%	★★★★☆☆
Calibre Mining	25.4x	2.4x	49.64%	★★★★☆☆
Sagicor Financial	1.3x	0.3x	-42.62%	★★★★☆☆
Primaris Real Estate Investment Trust	11.6x	3.1x	42.85%	★★★★☆☆
VersaBank	10.2x	4.1x	-16.51%	★★★☆☆☆

Click here to see the full list of 22 stocks from our Undervalued TSX Small Caps With Insider Buying screener.

We'll examine a selection from our screener results.

Chemtrade Logistics Income Fund (TSX:CHE.UN)

Simply Wall St Value Rating: ★★★★★★

Overview: Chemtrade Logistics Income Fund operates in the industrial chemicals and services sector, focusing on electrochemicals and water solutions with a market cap of approximately CA$0.85 billion.

Operations: Chemtrade Logistics Income Fund generates revenue primarily from its EC and SWC segments, with a combined total of CA$1.78 billion. The company's gross profit margin has shown variability, with the most recent figure at 22.43%.

PE: 8.4x

Chemtrade Logistics Income Fund, a small-cap stock in Canada, recently declared a cash distribution of CAD 0.055 per unit for August 2024 and completed a CAD 250 million fixed-income offering with 6.375% senior unsecured notes due in 2029. Second-quarter earnings showed sales of CAD 448.1 million and net income of CAD 14.6 million, down from last year’s figures. Insider confidence is evident with recent share purchases by executives over the past six months, indicating potential long-term value despite current financial challenges.

• Get an in-depth perspective on Chemtrade Logistics Income Fund's performance by reading our valuation report here.

• Gain insights into Chemtrade Logistics Income Fund's historical performance by reviewing our past performance report.

Flagship Communities Real Estate Investment Trust (TSX:MHC.UN)

Simply Wall St Value Rating: ★★★★★☆

Overview: Flagship Communities Real Estate Investment Trust operates in the residential real estate sector with a focus on manufactured housing communities, and has a market cap of approximately CAD $0.53 billion.

Operations: Flagship Communities Real Estate Investment Trust generates revenue primarily from its residential REIT segment, with significant growth noted over recent periods. The company's gross profit margin has shown a trend around 66.12% recently, reflecting its ability to manage costs relative to revenue. Operating expenses and non-operating expenses also play crucial roles in determining net income margins, which have varied across the periods but were recorded at 1.05% as of the latest data available for 2024-06-30 and 2024-09-01.

PE: 3.6x

Flagship Communities Real Estate Investment Trust, a small cap in Canada, reported strong Q2 2024 results with sales at US$21.23 million and net income of US$43.46 million, both up from last year. Earnings per share also increased significantly. Despite the positive earnings, revenue is forecast to grow by 8.9% annually while earnings are expected to decline by 46.1% over the next three years due to large one-off items impacting financial results and interest payments not being well covered by earnings. The company announced a monthly cash distribution of US$0.0492 per REIT unit for August 2024, continuing its consistent dividend payouts.

• Unlock comprehensive insights into our analysis of Flagship Communities Real Estate Investment Trust stock in this valuation report.

• Review our historical performance report to gain insights into Flagship Communities Real Estate Investment Trust's's past performance.

Nexus Industrial REIT (TSX:NXR.UN)

Simply Wall St Value Rating: ★★★★★☆

Overview: Nexus Industrial REIT focuses on owning and managing industrial properties, with a market cap of approximately CA$1.12 billion.

Operations: The company generates revenue primarily from investment properties, with the latest reported figure at CA$167.21 million. The gross profit margin has shown a consistent trend, reaching 71.56% in the most recent period.

PE: 3.6x

Nexus Industrial REIT reported Q2 2024 sales of C$43.91 million, up from C$38.42 million the previous year, but net income dropped to C$43.53 million from C$77.22 million. For the first half of 2024, sales reached C$85.51 million compared to last year's C$75.9 million, with net income rising to C$87.2 million from C$80.94 million previously despite higher risk funding sources and recent shareholder dilution concerns impacting financial stability and earnings quality negatively forecasted for the next three years at an average annual decline of 46%.

• Delve into the full analysis valuation report here for a deeper understanding of Nexus Industrial REIT.

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

Summing It All Up

• Reveal the 22 hidden gems among our Undervalued TSX Small Caps With Insider Buying screener with a single click here.
• Are you invested in these stocks already? Keep abreast of every twist and turn by setting up a portfolio with Simply Wall St, where we make it simple for investors like you to stay informed and proactive.
• Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent.

Ready For A Different Approach?

• 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com