Top Undervalued Small Caps With Insider Action In October 2024

As global markets are buoyed by China's robust stimulus measures and record highs in U.S. indices, small-cap stocks have been navigating a complex landscape of mixed economic signals. The S&P 600, reflecting the performance of smaller companies, has seen varied movements as investors weigh consumer confidence dips against encouraging inflation data nearing the Federal Reserve's target. In such an environment, identifying promising small-cap stocks often involves looking for those with strong fundamentals and potential insider activity that may indicate confidence in their future prospects.

Top 10 Undervalued Small Caps With Insider Buying

Name	PE	PS	Discount to Fair Value	Value Rating
Columbus McKinnon	22.2x	1.0x	40.21%	★★★★★☆
Primaris Real Estate Investment Trust	12.6x	3.4x	46.35%	★★★★☆☆
Essentra	718.7x	1.4x	38.12%	★★★★☆☆
Genus	168.9x	2.0x	-1.49%	★★★★☆☆
German American Bancorp	13.5x	4.5x	48.47%	★★★☆☆☆
Trican Well Service	8.0x	1.0x	9.22%	★★★☆☆☆
Calfrac Well Services	2.5x	0.2x	-58.37%	★★★☆☆☆
Community West Bancshares	18.7x	2.9x	42.25%	★★★☆☆☆
Delek US Holdings	NA	0.1x	-215.14%	★★★☆☆☆
Industrial Logistics Properties Trust	NA	0.7x	-234.62%	★★★☆☆☆

Click here to see the full list of 177 stocks from our Undervalued Small Caps With Insider Buying screener.

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

China Lesso Group Holdings (SEHK:2128)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: China Lesso Group Holdings is a leading industrial group in China specializing in the production and distribution of building materials and interior decoration products, with a market cap of CN¥12.34 billion.

Operations: The company generates revenue primarily from its Plastics & Rubber segment, with the most recent reported revenue at CN¥29.13 billion. The cost of goods sold (COGS) for this period is CN¥21.55 billion, resulting in a gross profit of CN¥7.59 billion and a gross profit margin of 26.04%. Operating expenses amount to CN¥3.44 billion, which includes sales and marketing as well as general and administrative expenses, impacting the net income margin recorded at 6.58%.

PE: 6.3x

China Lesso Group Holdings, a smaller company in its sector, shows potential as an undervalued investment. Despite a decline in sales and net income for the first half of 2024 compared to the previous year, insider confidence is evident with Luen Hei Wong purchasing 4 million shares worth approximately CNY 10.05 million between January and August 2024. The company's earnings are expected to grow by about 10.65% annually, though it faces challenges with high debt levels and reliance on external borrowing for funding.

• Click here to discover the nuances of China Lesso Group Holdings with our detailed analytical valuation report.

• Review our historical performance report to gain insights into China Lesso Group Holdings''s past performance.

Lee & Man Paper Manufacturing (SEHK:2314)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Lee & Man Paper Manufacturing is a company engaged in the production of pulp, tissue paper, and packaging paper, with a market capitalization of HK$12.34 billion.

Operations: The company's revenue streams are primarily derived from packaging paper and tissue paper, with packaging paper contributing significantly to total revenue. Over recent periods, the gross profit margin has shown a downward trend, reaching 10.03% as of December 2023. Operating expenses have consistently impacted profitability, with general and administrative expenses being a notable component.

PE: 7.9x

Lee & Man Paper Manufacturing has seen insider confidence with Ho Chung Lee purchasing 483,000 shares, valued at approximately HK$1.1 million, reflecting a 122% increase in their holdings. Despite relying on higher-risk external borrowing for funding and having debt not well covered by operating cash flow, the company reported improved financial performance for the first half of 2024. Sales reached HK$12.5 billion and net income more than doubled to HK$805.69 million compared to the previous year, indicating potential growth prospects amid its small-cap status.

• Click to explore a detailed breakdown of our findings in Lee & Man Paper Manufacturing's valuation report.

• Examine Lee & Man Paper Manufacturing's past performance report to understand how it has performed in the past.

Gemdale Properties and Investment (SEHK:535)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Gemdale Properties and Investment is engaged in property development, investment, and management with a focus on real estate projects, having a market capitalization of CN¥4.21 billion.

Operations: The company's primary revenue streams are from property development, which generated CN¥17.26 billion, and property investment and management, contributing CN¥1.23 billion. The cost of goods sold (COGS) for the latest period was CN¥16.78 billion, leading to a gross profit margin of 8.82%. Operating expenses were recorded at CN¥677.46 million with significant non-operating expenses impacting net income margins negatively in recent periods.

PE: -2.2x

Gemdale Properties and Investment, a company with a fluctuating share price, recently reported significant financial challenges. For the first half of 2024, they experienced a net loss of CNY 2.18 billion compared to a profit in the previous year. Despite this setback, insider confidence is evident as Non-Executive Director Lian Huat Loh purchased 10 million shares for approximately A$2.6 million between July and September 2024. This move suggests potential faith in future recovery or growth prospects amidst current difficulties.

• Delve into the full analysis valuation report here for a deeper understanding of Gemdale Properties and Investment.

• Assess Gemdale Properties and Investment's past performance with our detailed historical performance reports.

Seize The Opportunity

• Delve into our full catalog of 177 Undervalued Small Caps With Insider Buying here.
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Curious About Other Options?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
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• 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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