The Canadian market has been closely monitoring the U.S. Federal Reserve's recent symposium in Jackson Hole, as investors anticipate potential rate cuts that could impact economic conditions and market sentiment. With major indices like the S&P 600 for small-cap stocks largely treading water, there is growing interest in identifying undervalued opportunities within this segment. In such a climate, a good stock often exhibits strong fundamentals and insider action that suggests confidence from those closest to the company. Here are three top undervalued small caps in Canada with notable insider activity to consider.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: Calibre Mining is a gold mining company engaged in the exploration and production of refined gold, with operations primarily focused on its assets in Nicaragua and a market cap of approximately C$0.88 billion.
Operations: Calibre Mining generates revenue primarily from refined gold sales, amounting to $564.69 million in the most recent period. The company's gross profit margin was 42.07%, with net income reaching $52.54 million and operating expenses totaling $122.60 million.
PE: 26.0x
Calibre Mining, a small-cap Canadian company, has seen insider confidence with recent share purchases from June 2023 to August 2024. Despite a dip in profit margins from 14.3% to 9.3%, their earnings are projected to grow annually by 22.66%. Recent drill results at the Pan Heap Leach Gold Mine in Nevada and Eastern Borosi Mine Complex in Nicaragua show promising gold grades above resource estimates, indicating potential resource expansion and increased mine life.
Overview: Killam Apartment REIT operates in the real estate sector, focusing on owning, managing, and developing residential apartments, commercial properties, and manufactured home communities with a market cap of approximately CA$2.15 billion.
Operations: The company generates revenue primarily from Apartments (CA$312.15 million), with additional income from Commercial properties (CA$21.61 million) and Manufactured Home Communities (MHCs) (CA$20.92 million). Gross profit margin has shown an upward trend, reaching 65.59% as of the latest period ending on 2024-06-30, reflecting efficient cost management relative to revenue growth.
PE: 7.7x
Killam Apartment REIT, a small Canadian real estate investment trust, recently reported Q2 2024 earnings with sales of C$90.78 million and net income of C$114.45 million. Despite external borrowing being its sole funding source, the company maintains a stable financial position. Insiders have shown confidence by purchasing shares in recent months, reflecting positive sentiment towards future growth. Additionally, Killam has announced consistent monthly distributions and initiated a share repurchase program to enhance shareholder value.
Overview: NorthWest Healthcare Properties Real Estate Investment Trust operates within the healthcare real estate industry and has a market capitalization of approximately CA$2.75 billion.
Operations: The company generates revenue primarily from the healthcare real estate industry, with a notable gross profit margin of 82.10% as of June 30, 2024. Operating expenses and non-operating expenses significantly impact net income, which has shown variability over recent periods.
PE: -3.3x
NorthWest Healthcare Properties Real Estate Investment Trust, a smaller player in the Canadian market, recently declared a monthly distribution of C$0.03 per unit for August 2024. Despite reporting lower sales of C$119 million and a net loss of C$122 million for Q2 2024, insider confidence remains high with significant share purchases over the past six months. The company relies entirely on external borrowing for funding but anticipates earnings growth of 105% annually.
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:CXB TSX:KMP.UN and TSX:NWH.UN.
