The Canadian market is currently navigating a landscape shaped by shifts in bond yields and interest rate adjustments from the Bank of Canada, which have influenced investor sentiment towards cash and fixed-income investments. As the yield curve potentially steepens with further rate cuts, small-cap stocks on the TSX may present unique opportunities for investors seeking growth beyond traditional bonds and cash instruments. In this environment, identifying promising small-cap stocks involves assessing their potential to thrive amid changing economic conditions while considering recent insider activity as a possible indicator of confidence in their future performance.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: Primaris Real Estate Investment Trust focuses on the ownership, management, and development of its investment properties with a market capitalization of approximately CA$1.52 billion.
Operations: The primary revenue stream is derived from the ownership, management, and development of investment properties. As of 2025-01-02, the company reported a gross profit margin of 56.92%. Operating expenses include general and administrative costs amounting to CA$31.63 million.
PE: 12.7x
Primaris Real Estate Investment Trust, a smaller player in the Canadian market, has shown potential despite some financial challenges. Insider confidence is evident with Patrick Sullivan purchasing 20,000 shares for C$271,600 in late 2024. The company recently increased its monthly dividend to C$0.0717 per unit for December 2024 and completed a significant share buyback of over 1 million shares. While debt coverage remains an issue due to reliance on external borrowing, earnings are projected to grow by 22% annually.
Overview: Parex Resources is a company engaged in the exploration and production of oil and gas, with a market capitalization of approximately C$3.62 billion.
Operations: The company generates revenue primarily from its Oil & Gas - Exploration & Production segment, with recent quarterly revenues reaching $1.16 billion. Costs of goods sold (COGS) have been noted at $328.24 million, impacting the gross profit margin, which was 71.63% in the latest period. Operating expenses and non-operating expenses are significant components of the cost structure, with depreciation and amortization (D&A) also contributing to financial outcomes. The net income margin has shown variability over time, standing at 22.78% in the most recent quarter analyzed.
PE: 3.9x
Parex Resources, a Canadian energy player, has been navigating challenging waters with declining earnings and reduced profit margins. Despite these hurdles, insider confidence is evident as an executive acquired 23,915 shares worth approximately US$496,736 in the past year. The company has strategically partnered with Ecopetrol S.A., securing a 50% working interest in several Colombian blocks. While revenue dipped to US$257.8 million for Q3 2024 from US$314.78 million the previous year, Parex remains committed to shareholder returns through share repurchases totaling US$63.03 million and dividends of CAD 0.385 per share for Q4 2024.
Overview: Vermilion Energy is a company engaged in the exploration and production of oil and gas, with operations contributing CA$1.82 billion to its revenue.
Operations: The company's revenue primarily stems from the oil and gas exploration and production segment, with recent figures showing CA$1.82 billion in revenue. The gross profit margin has shown fluctuations, reaching 64.63% in the latest period. Operating expenses have been a significant component of costs, impacting net income margins which have been negative recently at -45.77%.
PE: -2.6x
Vermilion Energy, a Canadian company, is exploring acquisitions to enhance its portfolio while planning non-core asset divestments for debt reduction. Insider confidence is evident with recent share repurchases totaling 3.2 million shares for C$46 million. Despite a challenging year with net losses of C$28.42 million over nine months, the company increased its quarterly dividend by 8% to C$0.13 per share starting Q1 2025, reflecting optimism in future cash flow and production guidance of 84,000-88,000 boe/d for 2025.
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:PMZ.UN TSX:PXT and TSX:VET.
