Exploring July 2024's Undervalued Small Caps With Insider Actions In Canada

As the U.S. presidential campaign heats up, discussions around government debt, Fed policy, and trade are poised to influence market sentiments broadly, including the performance of small-cap stocks in Canada. In such a climate, identifying undervalued small caps with insider actions can offer intriguing opportunities for investors attentive to shifts in economic policies and market dynamics.

Top 10 Undervalued Small Caps With Insider Buying In Canada

Name	PE	PS	Discount to Fair Value	Value Rating
Dundee Precious Metals	8.8x	3.0x	45.59%	★★★★★★
Martinrea International	5.9x	0.2x	49.25%	★★★★★★
Calfrac Well Services	2.4x	0.2x	26.03%	★★★★★☆
Primaris Real Estate Investment Trust	11.6x	3.0x	34.68%	★★★★★☆
Nexus Industrial REIT	2.7x	3.3x	15.06%	★★★★☆☆
Guardian Capital Group	10.5x	4.1x	30.39%	★★★★☆☆
Sagicor Financial	1.1x	0.4x	-88.08%	★★★★☆☆
Russel Metals	9.3x	0.5x	-9.01%	★★★☆☆☆
AutoCanada	11.1x	0.1x	-95.08%	★★★☆☆☆
Freehold Royalties	15.7x	6.8x	47.89%	★★★☆☆☆

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

Let's take a closer look at a couple of our picks from the screened companies.

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 operations focused on this sector, contributing approximately CA$2.45 billion to its revenue.

Operations: The company generates a significant portion of its revenue from building materials, totaling CA$2.45 billion, with a smaller segment labeled 'other' contributing CA$33.57 million. Over recent periods, it has observed a gross profit margin ranging from 13% to 16%, indicating the percentage of revenue remaining after accounting for the cost of goods sold.

PE: 8.2x

Doman Building Materials Group, a notable player in the Canadian market, recently affirmed its quarterly dividend for the 57th consecutive time, reflecting a stable financial posture despite slightly lower sales and net income in Q1 2024 compared to the previous year. With insider confidence underscored by recent purchases of shares, and a renewed $500 million senior revolving credit facility ensuring robust operational flexibility until 2028, Doman exemplifies potential within undervalued sectors. Their strategic management decisions further hint at promising future prospects.

• Get an in-depth perspective on Doman Building Materials Group's performance by reading our valuation report here.

• Gain insights into Doman Building Materials Group's historical performance by reviewing our past performance report.

Exchange Income (TSX:EIF)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Exchange Income is a diversified corporation 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, generating CA$1.03 billion and CA$1.54 billion respectively. Over recent periods, the company has observed a gross profit margin trend around 34-35%.

PE: 18.9x

Despite recent dips in net income, Exchange Income's consistent dividend payouts, including the latest at CA$0.22 per share for July 2024, underscore its steady cash flow generation. Insider confidence is evident as they recently purchased shares, signaling belief in the company’s potential rebound. With a forecasted earnings growth of 22.51% annually and no dilution over the past year, this entity shows promise amidst its challenges with high-risk funding sources solely from external borrowing.

• Navigate through the intricacies of Exchange Income with our comprehensive valuation report here.

• Gain insights into Exchange Income's past trends and performance with our Past report.

Russel Metals (TSX:RUS)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Russel Metals is a Canadian company specializing in metal distribution and processing, with operations across steel distributors, energy field stores, and metals service centers, boasting a market cap of approximately CA$1.71 billion.

Operations: The company operates primarily through three segments: Steel Distributors, Energy Field Stores, and Metals Service Centers, generating CA$429 million, CA$982.2 million, and CA$2951.2 million respectively. Over recent periods, it has experienced a gross profit margin of 21.32%, reflecting its operational efficiency in managing the cost of goods sold relative to revenue.

PE: 9.3x

Russel Metals, a smaller Canadian company, recently increased its quarterly dividend by 5% to CAD 0.42 per share, signaling financial stability despite a slight downturn in first-quarter sales and net income year-over-year. With insider confidence demonstrated through the recent purchase of 300,000 shares for CAD 15 million, there's an evident belief in the firm's prospects. Furthermore, the anticipated acquisition of seven service centers from Samuel could enhance operational scope by Q3 2024, potentially boosting future growth and market position.

• Dive into the specifics of Russel Metals here with our thorough valuation report.

• Review our historical performance report to gain insights into Russel Metals''s past performance.

Taking Advantage

• Discover the full array of 32 Undervalued TSX Small Caps With Insider Buying right here.
• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.
• Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent.

Curious About Other Options?

• 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