In the wake of President Trump's inauguration and his flurry of executive orders, the Canadian market has experienced a notable uptick, with the TSX index climbing higher amid economic uncertainties surrounding potential U.S. tariff plans. As investors navigate this evolving landscape, identifying opportunities in small-cap stocks on the TSX can be particularly appealing due to their potential for growth and resilience in fluctuating market conditions.
Top 10 Undervalued Small Caps With Insider Buying In Canada
Overview: Hammond Power Solutions specializes in the manufacture and sale of transformers, with a market capitalization of CA$0.54 billion.
Operations: The company's revenue largely stems from the manufacture and sale of transformers, with recent figures reaching CA$766.82 million. A significant aspect of its financial profile is the gross profit margin, which has recently been noted at 33.46%. Operating expenses have been substantial, with sales and marketing expenses being a notable component.
PE: 22.1x
Hammond Power Solutions, a small Canadian company, shows potential in the undervalued stock space with insider confidence indicated by Dahra Granovsky's purchase of 1,500 shares valued at C$175,538. Their recent earnings report highlights growth with third-quarter sales reaching C$191.97 million and net income at C$16.31 million. Despite relying entirely on external borrowing for liabilities, the projected annual earnings growth of 11.48% suggests promising future prospects in their industry niche.
Overview: Flagship Communities Real Estate Investment Trust operates in the residential real estate sector, focusing on manufactured housing communities, with a market cap of approximately $0.52 billion.
Operations: Flagship Communities Real Estate Investment Trust generates revenue primarily through its residential real estate investments, with the latest reported revenue at $83.14 million. The company incurs costs of goods sold (COGS) amounting to $28.20 million, resulting in a gross profit margin of 66.08%. Operating expenses are recorded at $10.75 million, impacting overall profitability alongside non-operating expenses and depreciation & amortization costs.
PE: 3.7x
Flagship Communities Real Estate Investment Trust, a Canadian small-cap player, is currently navigating financial challenges with earnings forecasted to decline by 46% annually over the next three years. Despite this, revenue is expected to grow at 8.94% per year. Recent board appointments of experienced leaders like Candace McGraw and Jonathan Li signal strategic shifts aimed at future growth. The REIT maintains regular cash distributions of US$0.0517 monthly per unit, reflecting consistent shareholder returns amidst its evolving strategy.
Overview: Nexus Industrial REIT is a Canadian real estate investment trust focused on owning and managing industrial properties, with a market capitalization of CA$1.15 billion.
Operations: The company generates revenue primarily from investment properties, with recent figures showing CA$172.86 million. The gross profit margin has shown a consistent trend around 71.02% recently, indicating the efficiency in managing cost of goods sold relative to revenue. Operating expenses have been relatively stable, with the latest recorded at CA$9.60 million, impacting net income outcomes significantly when combined with fluctuating non-operating expenses.
PE: 12.3x
Nexus Industrial REIT, a smaller player in Canada's market, recently announced dividends of C$0.05333 per unit for February and March 2025. Despite reporting a net loss of C$45.99 million in Q3 2024, sales rose to C$45.53 million from the previous year. The forecasted 12% annual earnings growth suggests potential, but reliance on external borrowing poses a risk. Insider confidence is evident with recent share purchases, hinting at optimism for future performance despite current challenges with profit margins and interest coverage.
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:HPS.A TSX:MHC.UN and TSX:NXR.UN.
