Over the last 7 days, the United States market has remained flat, yet it has seen a significant rise of 27% over the past 12 months, with earnings forecasted to grow by 15% annually. In this context, identifying small-cap stocks that are potentially undervalued and have insider activity can present intriguing opportunities for investors looking to navigate these dynamic market conditions.
Top 10 Undervalued Small Caps With Insider Buying In The United States
Overview: Capital Bancorp operates as a diversified financial services company with segments in commercial banking, home loans, and an OpenSky credit card division, and has a market cap of approximately $0.33 billion.
Operations: Capital Bancorp generates revenue primarily through its Commercial Bank and Opensky segments, contributing $79.24 million and $69.46 million respectively. The company has consistently achieved a gross profit margin of 100%, indicating that it incurs no cost of goods sold in its financial reporting. Operating expenses are dominated by general and administrative costs, which were approximately $92.24 million in the latest period, impacting the net income margin which was 20.57%.
PE: 15.7x
Capital Bancorp, a smaller U.S. company, shows potential in the undervalued stock category. Recent earnings for Q3 2024 revealed net interest income of US$38.35 million, up from US$36.81 million the previous year, though net income slightly declined to US$8.67 million from US$9.79 million last year. Despite some challenges like increased charge-offs of US$2.66 million, insider confidence is evident with recent share repurchases completed at 543,215 shares for US$9.69 million since July 2022's buyback announcement.
Overview: Heidrick & Struggles International is a global executive search and consulting firm offering services in on-demand talent, consulting, and executive search across the Americas, Europe, and Asia Pacific with a market capitalization of approximately $1.07 billion.
Operations: Heidrick & Struggles International generates revenue through its segments, with Executive Search in the Americas being the largest contributor at $543.08 million. The company has seen fluctuations in its net income margin, which reached 7.47% as of September 30, 2021, but declined to 3.59% by September 30, 2024. Operating expenses have varied over time and include significant general and administrative costs that were $170.09 million by late 2024.
PE: 24.1x
Heidrick & Struggles, a company with a strong presence in executive search and consulting, has recently shown signs of insider confidence as Thomas Monahan purchased 7,500 shares for approximately US$302,825. This move suggests belief in the company's future prospects despite a current net profit margin decline from 5.5% to 3.6%. The appointment of Nirupam Sinha as CFO is anticipated to bring strategic financial leadership starting January 2025. While the company faces challenges with its external borrowing structure and recent earnings dip—US$14.83 million compared to US$14.99 million last year—it forecasts earnings growth of over 29% annually, indicating potential value for investors seeking opportunities in smaller market capitalization stocks.
Overview: Methode Electronics is a company that designs and manufactures custom-engineered solutions for various industries, including automotive, industrial, and interface sectors, with a market capitalization of approximately $1.61 billion.
Operations: Methode Electronics generates revenue primarily from the Automotive and Industrial segments, contributing $576.30 million and $499.30 million respectively. Over recent periods, the company's gross profit margin has shown a declining trend, reaching 16.21% in the latest period. Operating expenses have increased to $183.4 million, impacting overall profitability with net income margins turning negative at -8.16%.
PE: -5.2x
Methode Electronics, a smaller company in the U.S. market, has seen insider confidence with Independent Director David Blom purchasing 9,320 shares for US$100,749 in recent months. Despite facing operational challenges and legal issues impacting its automotive segment, the company's earnings forecast suggests potential growth of 163% annually. Recent financial results show a narrowing net loss and steady sales figures. Additionally, Methode declared a quarterly dividend of US$0.14 per share to be paid early next year.
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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.
