In recent weeks, global markets have been grappling with trade policy uncertainties and inflation concerns, leading to a significant sell-off in U.S. stocks, including the S&P 600 for small-cap companies. Amid this backdrop of volatility and cautious investor sentiment, identifying opportunities in undervalued small-cap stocks can be a strategic move to enhance portfolio diversification. A good stock in such an environment often exhibits strong fundamentals and potential for growth despite broader market challenges.
Top 10 Undervalued Small Caps With Insider Buying Globally
Overview: MFF Capital Investments is an investment company focused on managing a portfolio of high-quality international equities, with operations generating A$1.01 billion from equity investments.
Operations: The company's primary revenue source is from equity investments, generating A$1.01 billion recently. Operating expenses have shown a downward trend, with the latest figures at A$4.05 million. Net income margin has varied over time, reaching 67.44% in the most recent period analyzed.
PE: 3.7x
MFF Capital Investments, a smaller company in its sector, recently reported significant earnings growth for the half-year ending December 2024, with revenue reaching A$551.81 million and net income at A$381.46 million. This marks a substantial increase from the previous year. The company's decision to raise its interim dividend to 8 cents per share reflects confidence in its financial health despite relying solely on external borrowing for funding. Insider confidence is evident with recent share purchases by insiders, suggesting potential value recognition within the company.
Overview: First National Financial is a Canadian company that specializes in mortgage lending and mortgage servicing, with a market capitalization of approximately CA$2.71 billion.
Operations: First National Financial's revenue primarily comes from its mortgage lending and related services, with significant costs attributed to cost of goods sold (COGS) and operating expenses. The company's gross profit margin has shown variability, peaking at 86.04% in recent periods. Operating expenses, including general and administrative costs, have also been a considerable part of the financial structure.
PE: 12.0x
First National Financial, a smaller player in the financial sector, recently reported a decline in net income to C$203 million for 2024 from C$253 million the previous year. Despite this, insider confidence is evident as Stephen J. Smith purchased 463,300 shares valued at approximately C$20.44 million, marking a 2% increase in their holdings. While earnings are projected to grow annually by over 12%, reliance on external borrowing poses higher risk compared to customer deposits.
Overview: Plaza Retail REIT is a Canadian company focused on the ownership and development of retail real estate, with operations generating CA$124.54 million in revenue.
Operations: The company generates revenue primarily from retail real estate ownership and development, with the latest reported figure at CA$124.54 million. The gross profit margin has shown some variability, reaching 66.37% in mid-2021 before settling around 62.85% by late 2024. Operating expenses have gradually increased over time, impacting net income margins which fluctuated significantly, peaking at 95.56% in early 2022 and dropping to approximately 20.11% by the end of 2024.
PE: 15.8x
Plaza Retail REIT, a smaller player in the real estate investment trust sector, recently posted solid financial results with sales of C$121.28 million and net income of C$25.05 million for 2024, showing growth from the previous year. Despite relying solely on external borrowing for funding, which poses higher risks compared to customer deposits, Plaza maintains steady monthly distributions of C$0.02333 per unit. Insider confidence is evident with recent share purchases by company insiders in early 2025, suggesting potential value recognition within the firm’s operations and prospects.
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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 ASX:MFF TSX:FN and TSX:PLZ.UN.
