As the Canadian market heads into 2025 with strong momentum, investors are keeping an eye on potential curveballs that could impact their portfolios. Amidst this backdrop, small-cap stocks on the TSX present intriguing opportunities, particularly those trading at valuations in line with or below their historical averages, offering a chance to capitalize on sectors that have been overlooked during the recent bull market.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: Black Diamond Group specializes in providing workforce accommodation and modular space solutions, with a market cap of CA$0.44 billion.
Operations: The company's revenue is primarily derived from Workforce Solutions and Modular Space Solutions, with recent figures showing a gross profit margin of 46.06%. Over the analyzed periods, the company experienced fluctuations in net income margin, reaching as high as 8.45% but also recording negative margins in earlier years. Operating expenses have consistently been a significant portion of costs, impacting overall profitability.
PE: 22.2x
Black Diamond Group, a small Canadian company, recently reported third-quarter sales of C$101.19 million, down from C$117.52 million the previous year, with net income falling to C$7.37 million from C$13.56 million. Despite high debt levels and reliance on external borrowing, insider confidence is evident through recent share purchases by executives in the past quarter. The company forecasts earnings growth of 24% annually and increased its quarterly dividend by 17%, signaling potential future value for investors seeking growth opportunities in smaller markets.
Overview: Nexus Industrial REIT is a Canadian real estate investment trust focused on owning and managing industrial properties, with a market capitalization of approximately CA$1.15 billion.
Operations: The company generates revenue primarily from investment properties, with recent figures reaching CA$172.86 million. The gross profit margin has shown a consistent trend around 71%, demonstrating efficient cost management relative to revenue. Operating expenses have been relatively stable, contributing to a net income margin that fluctuates significantly due to non-operating expenses and other financial activities.
PE: 13.0x
Nexus Industrial REIT, a Canadian small cap, has seen insider confidence with recent share purchases. Despite a challenging financial position due to reliance on external borrowing and interest payments not fully covered by earnings, the company is focused on growth. Earnings are projected to rise 12% annually, although profit margins have declined from last year's 91% to 25%. Recent Q3 results showed sales of C$45.53 million but a net loss of C$45.99 million. Strategic board appointments aim to bolster expertise in real estate and finance sectors for future prospects.
Overview: Sagicor Financial operates as a financial services provider with key segments in life insurance and financial services across the Caribbean, USA, and Jamaica, with a market capitalization of $1.23 billion.
Operations: Sagicor Financial's revenue streams primarily include Sagicor Jamaica, Sagicor Life, and Sagicor Life USA. Over recent periods, the company has seen fluctuations in its gross profit margin, with a notable peak at 52.64% in September 2023. Operating expenses have varied but are consistently significant relative to gross profit.
PE: 1.2x
Sagicor Financial, a Canadian company with small capitalization, recently reported a turnaround in its financial performance. For Q3 2024, net income reached US$59.05 million from a loss of US$3.53 million the previous year, signaling improved profitability despite forecasted earnings declines over the next three years. Insider confidence is evident as Gilbert Palter acquired 225,000 shares for approximately US$1.26 million in November 2024. However, reliance on external borrowing poses funding risks without customer deposits to stabilize liabilities.
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:BDI TSX:NXR.UN and TSX:SFC.
