In recent weeks, global markets have shown a positive shift as trade tensions between the U.S. and China appear to be easing, leading to gains in small- and mid-cap equities for the third consecutive week. Despite this optimism, economic indicators such as the slowdown in U.S. business activity growth highlight ongoing uncertainties that can impact smaller companies more acutely than their larger counterparts. In this environment, identifying small-cap stocks with strong fundamentals and potential insider action can offer intriguing opportunities for investors looking to navigate these complex market conditions.
Top 10 Undervalued Small Caps With Insider Buying Globally
Overview: Champion Iron is a mining company focused on the production and development of iron ore concentrate, with a market cap of CA$3.25 billion.
Operations: Champion Iron generates revenue primarily from iron ore concentrate sales, with a recent figure of CA$1.51 billion. The company's cost of goods sold (COGS) is significant, amounting to CA$1.02 billion, impacting its gross profit margin at 32.94%. Operating expenses and non-operating expenses further affect profitability, with net income recorded at CA$128.70 million and a net income margin of 8.50%.
PE: 16.5x
Champion Iron, a small company in the mining industry, recently reported production results for Q4 ending March 31, 2025. Waste mined increased significantly to 10.9 million wmt from last year's 6.5 million wmt, while ore milled slightly decreased to 9.2 million wmt from 9.3 million wmt previously. Despite lower profit margins dropping to 8.5% from last year’s 17.9%, insider confidence is evident with share purchases over the past year, hinting at potential future growth as earnings are projected to rise by approximately 18% annually.
Overview: Freightways Group operates in the logistics sector, focusing on express package and business mail services as well as information management, with a market capitalization of NZ$1.65 billion.
Operations: Freightways Group generates revenue primarily from its Express Package & Business Mail segment, contributing NZ$1.03 billion, and the Information Management segment with NZ$226.23 million. The company's gross profit margin has shown a decline from 33.92% in March 2015 to 29.52% in December 2024, indicating changes in cost management or pricing strategies over time. Operating expenses have consistently increased alongside revenue growth, impacting overall profitability metrics such as net income margin which was last recorded at 5.96%.
PE: 24.2x
Freightways Group, a smaller company with potential for growth, reported half-year sales of NZ$662 million and net income of NZ$44.64 million, showing year-on-year improvement. Despite its high debt level and reliance on external borrowing, earnings are projected to grow annually by 11.63%. Recent dividend announcements reflect steady cash flow management. Insider confidence is evident from share purchases over the past six months, suggesting belief in future prospects despite financial risks tied to funding structure.
Overview: Doman Building Materials Group is a company that specializes in the distribution and manufacturing of building materials, with a significant focus on this segment, contributing CA$2.63 billion to its operations.
Operations: The company primarily generates revenue from its Building Materials segment, amounting to CA$2.63 billion. Over the observed periods, the gross profit margin showed a notable trend, peaking at 17.44% in June 2021 and fluctuating around this level before reaching 16.31% in March 2024. Operating expenses consistently impact net income margins, which saw a significant increase to 6.20% in June 2021 but experienced fluctuations thereafter, ending at approximately 2.03% by December 2024.
PE: 11.3x
Doman Building Materials Group, a company with external borrowing as its sole funding source, has shown insider confidence through recent share purchases. Despite a decline in net profit margin from 3% to 2%, the company continues to affirm dividends, marking its 60th consecutive quarter at C$0.14 per share. Sales rose to C$2.66 billion for the year ending December 2024, though net income slipped to C$54 million. Earnings are forecasted to grow annually by nearly 26%, indicating potential for future value realization amidst current financial challenges.
Shareholder in one or more of these companies? Ensure you're never caught off-guard by adding your portfolio in Simply Wall St for timely alerts on significant stock developments.
Simply Wall St is your key to unlocking global market trends, a free user-friendly app for forward-thinking investors.
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:CIA NZSE:FRW and TSX:DBM.
